"Stop Virtual Currency Money Laundering"...Commercial Banks Restrict Foreigners' Overseas Remittances (Comprehensive)

Following KB Kookmin, Shinhan, Hana, and Woori, Nonghyup Bank also reduces non-face-to-face overseas remittances starting today

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

Monthly Remittance Limit Set at $10,000... Supporting Documents Required When Exceeding the Limit

[Asia Economy Reporter Lee Kwang-ho] As the virtual currency market overheats and suspected cases of illegal foreign exchange transactions, known as "hwanchigi," surge, banks are consecutively reducing overseas remittance limits for foreigners or non-residents. Following the amendment of the Act on Reporting and Using Specified Financial Transaction Information, which took effect on the 25th of last month, banks have independently established guidelines for issuing real-name accounts for virtual currency exchanges. However, given the ambiguous specific instructions from financial authorities, these measures are interpreted as proactive steps acknowledging that the guidelines require further supplementation before being used as contractual directives. While contracts with exchanges can proceed under these guidelines, banks are reluctant to act hastily until clear instructions from financial authorities are issued, as they could bear full responsibility if problems arise later.

According to the financial sector on the 11th, NH Nonghyup Bank has limited the amount foreigners or non-residents can send overseas via non-face-to-face channels to $10,000 per month (approximately 11.14 million KRW). Previously, Nonghyup Bank restricted non-face-to-face overseas remittances to $10,000 per transaction and $50,000 annually. If the remittance amount exceeds the limit, documents proving legitimate income or remuneration must be submitted. In other words, if the cumulative monthly remittance is under $10,000, remittance can proceed without additional documentation as before, but if it exceeds $10,000, supporting documents must be submitted at the main or branch office to verify the funds are the sender’s own before the remittance is allowed.

Shinhan Bank has also required that since the 28th of last month, when overseas remittances via non-face-to-face channels such as internet banking, SOL, and SOL Global exceed $10,000 per month, income verification documents must be submitted at the main or branch office to confirm the funds are the sender’s own. Woori Bank has introduced a $10,000 monthly limit for its 'UnionPay Quick Remittance Direct Overseas Remittance Service' for non-face-to-face remittances to China. KB Kookmin Bank and Hana Bank have also adjusted or restricted their monthly remittance limits accordingly.

Industry: "Limitations in Verifying Exchange Remittances"... Financial Authorities Need Legal Grounds and Regulations

The reason banks are imposing overseas remittance restrictions is due to the rapid increase in suspected cases of foreigners using the so-called "Kimchi Premium" for virtual currency hwanchigi. However, some argue that there is ambiguity in the legal grounds to block overseas remittances. The Foreign Exchange Transactions Act regulates reporting procedures based on the underlying cause, but virtual currency is not included in the capital transaction types enumerated by law, such as deposits/trusts, loans/guarantees, issuance/acquisition of securities, or derivative transactions, thus lacking legal grounds for overseas remittance.

Moreover, although banks are restricting overseas remittance transactions suspected to be related to virtual currency cases, it cannot be conclusively stated that all virtual currency transactions are involved in money laundering or crimes. Therefore, there is a strong call for clearer legal grounds and guidelines from financial authorities. A financial sector official pointed out, "Banks are checking whether remittances are sent to overseas virtual currency exchanges, but there are limitations," adding, "Clear legal grounds or regulations from financial authorities are necessary."

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

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