Amended Foreign Exchange Transactions Act to Become Effective

The Ministry of Strategy & Finance of South Korea made a pre-announcement of legislation on February 22 to revise the Enforcement Decree of the Foreign Exchange Transactions Act and the Foreign Exchange Transaction Regulations before the implementation of the revised Foreign Exchange Transactions Act for the purpose of facilitating overseas remittance of small sums by fintech firms and the like.

By making the pre-announcement of legislation, the South Korean government added some details to the qualification standards required for those providing the overseas remittance of small sums and how to protect those using the service.

According to it, the qualification standards include registration as a company on the commercial law, a minimum equity capital of two billion won and a total debt-to-equity capital ratio of 200% or less. In addition, every company providing the service has to run its own computing facilities and money laundering prevention mechanisms, have its foreign exchange information system connected to the Bank of Korea and have its own foreign exchange experts.

The upper limit on payment and receipt per case has been fixed at US$3,000 and the annual cumulative total of payment and receipt between a single person and a single operator is limited to US$20,000. Bank accounts to be used for the overseas remittance of small sums have to be designated and the payment and receipt have to be carried out only via the accounts. From July this year onwards, confirmation by a bank and reporting by a customer can be omitted in the case of every overseas remittance of US$3,000 or less. At present, the threshold value is US$2,000 per case.