The Bank of Korea Warns "Be Careful When Buying and Selling Foreign Currency with Danggeun... Must Report Transactions Over $5,000"

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] Amid the recent sharp rise in the won-dollar exchange rate, secondhand trading platforms like Danggeun Market and peer-to-peer US dollar trading over the internet have increased, prompting the Bank of Korea to issue precautions regarding foreign currency trading.

According to the Bank of Korea on the 13th, due to the recent steep increase in the exchange rate raising currency exchange costs, direct transactions via the internet are taking place. However, when trading foreign currency amounts exceeding $5,000 or even small amounts for the purpose of profit from trading, a report must be filed with the foreign exchange authorities.

The Bank of Korea explained, "Residents must report to the Bank of Korea in advance to trade foreign currency among themselves. However, foreign currency trading among residents not intended for profit from trading can be conducted without reporting if it is within $5,000."

Additionally, the capital transaction general rules exempt reporting for capital transactions within $50,000 annually, but this applies only when payments are made through foreign exchange banks, so it does not apply to dollar trading between individuals.

Furthermore, even if the annual cumulative amount is within $50,000, foreign currency trading exceeding $5,000 must be reported to the Bank of Korea.

If the reporting obligation is violated, depending on the amount involved, a fine of up to 100 million KRW may be imposed for amounts up to 1 billion KRW, and criminal penalties (fines or imprisonment) apply for amounts exceeding 1 billion KRW.

To conduct continuous or repeated foreign currency trading between individuals without going through foreign exchange banks for business purposes, prior registration as a foreign exchange business institution (currency exchange business) with the Ministry of Economy and Finance is required.

Operating without registration may also result in criminal penalties such as imprisonment for up to three years or fines up to 300 million KRW.

The Bank of Korea added, "We do not automatically assume that a profit from trading foreign currency means the purpose was profit from trading; we comprehensively assess the circumstances of foreign currency acquisition," and noted, "There have been no cases of peer-to-peer foreign currency trading reported in the past two years."

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