Financial Authorities Issue Warning on Overseas Remittances for Cryptocurrency and Study Abroad Fees: "Fines for Violations"

603 Cases of Foreign Exchange Transaction Act Violation Fines Imposed This Year

[Asia Economy Reporter Kim Jin-ho] International student A sent a total of 550 million yen over 76 transfers during 12 months. Although A reported and remitted the funds as study abroad expenses, financial authorities' investigation revealed that the money was actually used to purchase overseas virtual currency. The financial authorities decided to impose a fine on A.

The financial authorities have announced plans to strengthen verification of cases where foreign currency is used for purposes other than the stated reason after remittance, as well as so-called 'split remittances,' where transaction amounts are divided and sent separately. This is due to a significant increase in cases deviating from the declared remittance purpose recently.

On the 15th, the Financial Services Commission shared 'Cases of fines imposed related to violations of the Foreign Exchange Transactions Act,' focusing on such cases.

According to the current Foreign Exchange Transactions Act, overseas remittances exceeding $5,000 per transaction (or $50,000 cumulatively per year) require submission of supporting documents for the transaction reason and amount. However, even if annual overseas remittances exceed $50,000, submission of supporting documents is exempted if the transaction details can be verified in advance, such as for study abroad funds.

The Financial Services Commission stated that recently, cases of foreign currency being used beyond the stated remittance purpose or large sums being sent overseas by abusing the Foreign Exchange Transactions Act have significantly increased. The number of fines imposed for violations of the Foreign Exchange Transactions Act, which was only 313 cases in 2017, has reached 603 cases this year.

A representative case is when an overseas student submits supporting documents for tuition fees and remits funds, but then uses the funds to purchase overseas virtual assets. There have also been many cases where large sums exceeding several hundred million won were split into amounts under $5,000 and sent overseas in multiple transfers.

However, sending large sums overseas in violation of the payment procedures stipulated by law is considered an act that undermines the stability of the foreign exchange market and may be subject to fines depending on the case.

In particular, if foreign currency funds are misused differently from the original purpose after submitting related documents under the name of study abroad funds, or if large sums are split and sent in multiple transfers, it is regarded as a violation of payment procedures.

The Financial Services Commission plans to hold a briefing session soon for foreign exchange banks to prevent occurrences of Foreign Exchange Transactions Act violations. It also intends to encourage accurate guidance on the Foreign Exchange Transactions Act at bank frontline counters.

A Financial Services Commission official explained, "We will continuously inspect whether foreign exchange banks have established internal control measures to comply with the Foreign Exchange Transactions Act and how effectively they are being utilized."

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