Commercial Banks Block 'Virtual Currency Hawala'... Monthly Remittance Limits and Strengthened Documentation Requirements

Financial Authorities Inspect Banks' Remittance Records to Overseas Virtual Currency Exchanges

The appearance of Bithumb, one of the four major domestic cryptocurrency exchanges (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] Commercial banks have started limiting overseas remittance amounts to prevent illegal foreign exchange transactions related to cryptocurrencies such as Bitcoin, commonly known as "hwanchigi."

According to the financial sector on the 11th, following KB Kookmin, Shinhan, Hana, and Woori Banks, NH Nonghyup Bank decided to limit the monthly overseas remittance amount that foreigners or non-residents can send through non-face-to-face channels to $10,000 (approximately 11.14 million KRW) starting today.

Nonghyup Bank had previously limited non-face-to-face overseas remittances to $10,000 per transaction and $50,000 annually. However, the face-to-face overseas remittance limit remains at $50,000 per transaction and $50,000 annually.

If the remittance amount exceeds the limit, documents proving that the remittance is for legitimate income or compensation must be submitted. In other words, if the cumulative monthly remittance amount is below $10,000, remittance can be made without submitting additional documents as before, but if it exceeds $10,000, the sender must submit proof documents to the head office or branch and verify that the funds are their own before the remittance is allowed.

Shinhan Bank has also required since the 28th of last month that when overseas remittances are made through non-face-to-face channels such as internet banking, SOL, or SOL Global, if the cumulative monthly remittance amount exceeds $10,000, income verification documents must be submitted to the head office or branch and the source of funds confirmed.

Woori Bank has introduced a $10,000 monthly limit for its UnionPay Quick Remittance Direct overseas remittance service, which allows non-face-to-face remittances to China. KB Kookmin Bank has limited online overseas remittances to not exceed $50,000 over three months, and Hana Bank has lowered the daily limit for non-face-to-face overseas remittances via Hana EZ to $10,000.

Additionally, KakaoBank currently does not allow foreigners to open accounts or make remittances, so instead of directly imposing overseas remittance limits, it is closely monitoring overseas remittance activities suspected of money laundering by issuing caution notices to all customers.

The reason commercial banks are imposing overseas remittance restrictions is interpreted as an effort to filter out activities such as sending money to buy Bitcoin at cheaper prices on overseas exchanges than domestically, then selling the imported Bitcoin on domestic exchanges to earn a profit margin and transferring the proceeds overseas.

A commercial bank official said, "This is to prevent customer damages such as violations of foreign exchange transaction regulations, money laundering, fraudulent fundraising, multi-level marketing scams, and overseas transfer of funds obtained through voice phishing."

Meanwhile, financial authorities are conducting partial inspections on commercial banks regarding remittances to cryptocurrency exchanges. They are examining the scale of remittances to overseas exchanges for cryptocurrency investment purposes and whether proper verification was conducted during the process.

In this regard, a financial sector official advised, "Although commercial banks are checking whether remittances are made to overseas cryptocurrency exchanges, there are limitations. Clear legal grounds or regulations from financial authorities are necessary."

This content was produced with the assistance of AI translation services.