Korea tightens monitoring of cross-border crypto transfers in FX decree
In short
South Korea’s Ministry of Economy and Finance gave public notice on October 7 of a partial amendment to the Enforcement Decree of the Foreign Exchange Transactions Act, a follow-up to the law revised in June. The draft would define a registered “virtual asset transfer business”, require transfer records to be reported to the Bank of Korea and shared with tax, customs and financial authorities, and reorganise fintech-based foreign exchange services. Penalties would be tightened, including one-strike-out deregistration for serious violations and a fine cap of up to 100% of profits gained.
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South Korea’s Ministry of Economy and Finance said on October 7 that it is giving public notice of a partial amendment to the Enforcement Decree of the Foreign Exchange Transactions Act. The ministry said the amendment is a follow-up to the revised act that passed in June, specifying matters delegated by the law and reducing blind spots in foreign exchange transactions, according to Yonhap and Seoul Economic Daily. The ministry’s own announcement listed the legislative notice. [ 1 , 3 , 5 , 6 ]
Under the draft, a new category of “virtual asset transfer business” would cover transfers between domestic and overseas virtual asset service providers and transfers between domestic providers and personal wallets, the reports said. Operators would have to register in advance with the finance minister, meeting requirements that include computer facilities and at least two staff with foreign exchange experience or training. Transfer records would be reported to the Bank of Korea, which runs the foreign exchange information centre, through the foreign exchange computer network, and shared with the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the Financial Intelligence Unit for use in investigations of illegal foreign exchange transactions. [ 3 , 4 , 6 ]
The amendment also reorganises fintech-based foreign exchange business. Small-amount overseas remittance and other specialised foreign exchange businesses would be combined into an “overseas payment settlement business” with six sub-sectors, adding two new categories, and transfers of foreign-currency prepaid payment means to third parties would be institutionalised within an amount limit to be set later, the reports said. [ 3 , 6 ]
Registration requirements and penalties would be tightened. Executives would have to meet disqualification standards under the financial company governance law, and Seoul Economic Daily reported that operators would need capital of at least 10 million won as set by ministerial notice. Serious violations such as voice phishing, illegal trade payments and virtual asset “hwanchigi” remittance would trigger a one-strike-out cancellation of registration, and the cap on fines imposed instead of business suspension would rise to as much as 100 percent of profits gained from the violation, from a current 70 percent. [ 3 , 6 ]
The customs service’s inspection authority would be extended to service and capital transactions discovered during import-export inspections, and the objection period for the foreign exchange soundness levy would lengthen to 30 days while the result notification deadline would be shortened to 14 days, with a 10-year sunset. [ 3 , 6 ]
Public comment on the draft runs until October 26, after which it goes through regulatory review, legislation ministry review and cabinet steps, with implementation planned for December 3, when the revised act takes effect. Reporting on the announcement appeared between 09:00 and 09:30 local time; Asia Economy framed the plan as an integrated monitoring system that would immediately remove currency exchanges caught conducting illegal exchange or “hwanchigi” operations from the market. [ 1 , 2 , 3 , 6 ]
Why it matters
The draft extends South Korea’s foreign exchange reporting regime to cross-border transfers of virtual assets, including transfers between service providers and personal wallets, and routes the data to the central bank and investigators. It also redraws the licensing map for fintech payment and remittance firms, with tighter entry requirements and heavier sanctions. The documents give no data on how much activity the new reporting would cover.
Key facts
- The Ministry of Economy and Finance announced on October 7 that it is giving public notice of a partial amendment to the Enforcement Decree of the Foreign Exchange Transactions Act. [ 1 , 3 , 4 , 5 , 6 ]
- The amendment is a follow-up to the Foreign Exchange Transactions Act revised in June, and is intended to specify delegated matters and reduce blind spots in foreign exchange transactions. [ 1 , 3 , 4 , 6 ]
- A new “virtual asset transfer business” would require prior registration with the finance minister, meeting requirements including computer facilities and at least two staff with foreign exchange experience or training. [ 3 , 6 ]
- The category covers transfers between domestic and overseas virtual asset service providers and transfers between domestic providers and personal wallets. [ 3 , 6 ]
- Transfer records would be reported to the Bank of Korea, the foreign exchange information centre, through the foreign exchange computer network and shared with the National Tax Service, Korea Customs Service, Financial Supervisory Service and Financial Intelligence Unit. [ 3 , 4 , 6 ]
- Small-amount overseas remittance and other specialised foreign exchange businesses would be consolidated into an “overseas payment settlement business” with six sub-sectors. [ 3 , 6 ]
- Serious violations such as voice phishing, illegal trade payments and virtual asset remittance fraud would trigger one-strike-out registration cancellation, and the fine cap would rise to up to 100% of profits gained. [ 3 , 6 ]
- The legislative notice runs until October 26, with implementation planned for December 3, when the revised act takes effect. [ 3 , 6 ]
Confirmed by several sources
- The Ministry of Economy and Finance issued a legislative notice of the Enforcement Decree amendment on October 7. [ 1 , 2 , 3 , 4 , 5 , 6 ]
- Cross-border virtual asset transfers would be monitored, with records notified to the Bank of Korea through the foreign exchange computer network. [ 3 , 4 , 6 ]
- Virtual asset transfer operators would have to register in advance with the finance minister under stated conditions. [ 3 , 4 , 6 ]
- Existing small-amount overseas remittance and other specialised foreign exchange businesses would be reorganised into an “overseas payment settlement business” with six sub-sectors. [ 3 , 6 ]
- The legislative notice runs until October 26 and the decree is to be implemented on December 3 to match the revised act. [ 3 , 6 ]
Still unclear
- The maximum amount allowed when transferring foreign-currency prepaid payment means to a third party. The documents say the limit will be set later through a revision of foreign exchange regulations, without giving a figure.
- The exact minimum capital figure for registration. Seoul Economic Daily reports at least 10 million won to be set by ministerial notice, while Yonhap says only that a certain level of capital would be required; the figure is single-source.
- Whether the draft will be enacted as proposed. The documents describe planned regulatory review, legislation ministry review and cabinet steps, but report no outcome for those stages.
What local media are saying
Timeline, local time
- Asia Economy, Newsis and Yonhap publish reports on the ministry’s legislative notice of the enforcement decree amendment. [ 1 , 2 , 3 ]
- Chosun Ilbo reports that cross-border virtual asset transfer records will be captured on the Bank of Korea’s foreign exchange computer network. [ 4 ]
- The Ministry of Economy and Finance posts its notice of the legislative notice of the enforcement decree amendment. [ 5 ]
- Seoul Economic Daily publishes a detailed account of the draft, including registration requirements, sanctions and the December 3 implementation plan. [ 6 ]