Regulation on Foreign Exchange
Transaction in Korea 1
1. Explanation on Term
2. Classification of Amenity
(1)Amenity of Citizen
(2)Amenity of Foreigner
(3)Amenity of Corporate
3. Purchase & Sale by Foreign Exchange Bank
(1)Foreign Exchange Purchase from Residents
(2)Foreign Exchange Purchase from Non-Residents
(3)Sale of Foreign Exchange
4. Remittance in Foreign Currency
5. Remittance in Won
(1) Remittance in Won by Non-Residents
(2) Remittance in Won by Foreign Residents
Foreign Exchange Transaction
Regulation in Korea 1
1. Explanation on Terms
(1) General Meaning of Foreign Exchange
Foreign Payment
Instruments
Foreign Currency Payment Instruments indicated of foreign currency or
used in foreign countries
“What is Payment
Instruments?”
Government Note, Bank Note, Coinage, Check, Postal Money Order, L/C, Bill of Exchange
Promissory Note, Payment Order by Mail or Telegraphy, Others with Indication of Payment
recognized by Minister of Ministry of Strategy & Finance
Foreign
Exchange Bank
Refers to domestic branch running foreign exchange transactions of financial
institution prescribed in Article 14 Item 1
Foreign Exchange Bank
for Assigned Transaction
Refers to the foreign exchange bank assigned by concerned party of
transaction for the activity applied of foreign exchange transaction
regulation or foreign transaction and follow-up services
Authorized
Transaction
Transaction approved or authorized or does not require approval, etc by law,
ordinance and regulation
Overseas
Traveler
It is classified into student studying abroad, visitor in foreign countries and
general overseas traveler
Report
•Study Abroad Students : Person staying in foreign countries with the purpose of
studying in foreign education institution, research institution or training institution for
over 6 months or research or training in academics and technology
•Visitor in Foreign Countries : Person with purpose of commerce, culture, public
affairs and technology training or overseas training of less than 6 months, etc
•General Overseas Traveler : Resident whom is not study abroad students or visitor
in foreign countries. Overseas traveler
Document verifying the cause and
Amount of the report, current transaction, etc
Concerned Party
of Transaction
Foreign
Exchange
After confirmation on documents,
Bank
Issuance of “Permit” record and official seal of
chief of foreign exchange bank
2
2. Classification of Amenity
Standard for Amenity Classification
It is determined based on the region for residence or economic activity for certain period
regardless of nationality
Resident
• Individual with address or residence within Korea
• Corporate with its headquarter in Korea
Non-Resident •Individual and corporate other than resident
(1)Amenity of Citizen
Amenity of Citizen
Citizen of Korea is considered as resident in principle provided that his
address is in Korea
Application for Non-Resident
• Person working in branch, other offices, international organization,
etc In foreign countries
• Person staying in foreign countries with purpose to stay
Oh! Two years
have already
in foreign countries for more than 2 years
passed…
=> non-resident from day after departure
2 years
Study
Aboard
in Japan
for 2
years
Non-Resident from day
after departure
Non-resident from day after 2 year stay
• Person staying in foreign countries for over 2 years with purpose of short-term visit
=>non-resident from day after 2 year stay
• Non-resident citizen whose temporary
staying period in Korea is less than 3 months.
Non-Resident
Visit to Korea less than 3 months
Korean Citizen with
US Green Card
Resident
Visit to Korea over 3 months
• Exception> Person departed with overseas diplomatic and consular missions is considered
as resident regardless of above regulation
3
(2) Amenity of Foreigners
Amenity of Foreigners
Foreigner is considered as non-resident in principle provided that his
address or residence is not in Korea.
Application for Resident
• Person working in domestic branch (office) or leading operating activity in Korea
• Person staying over 6 months in Korea
• Once resident foreigner who is re-entering and staying in Korea with the purpose of staying
more than 6 months after his departure.
(3) Amenity of Corporate
Amenity of Corporate
Resident
1) Organization, institution, etc with its main office in Korea
2) Branch, agency and other office of non-resident in Korea
3) Diplomatic and consular office of Korea
1) Organization, institution, etc with its main office in foreign countries
Non-Resident 2) Foreign diplomatic and consular office and international organizations in Korea
3) Branch (office) in foreign countries
Non-Resident
Headquarter in Germany
Resident
Branch in Korea
4
3. Purchase & Sale by Foreign Exchange Bank
(1)Foreign Exchange Purchase from Residents
Case where bank purchases cash or check in foreign
currency brought by client or amount remitted from
overseas with application of customer rates
Foreign Exchange Purchase
from Residents
• Confirmation in Foreign Exchange Purchase
1)Confirmation on Real Name (Voucher for Real Name Confirmation – Resident Registration Card, Passport,
Etc) → Confirmation may be waved in case amount of foreign currency purchase is less than 1 million won.
2) In case purchase amount is over USD 1,000, confirmation on acquisition by authorized transaction
→ In case amount is over USD 20,000 (single borrower, single person, single store), request for
verification document of authorized transaction (except the inherited fund)
→ Request for verification document is unnecessary for the transaction less than USD 20,000
(single borrower, single person, single store) with which description on transaction by the
concerned party is completed
→ Transaction over USD 20,000 (single borrower, single person, single store) for which verification
document for acquisition route cannot be submitted Request for ‘receipt confirmation’ (foreign
currency or foreign T/C is excluded from request target)
→ In case cause of receipt is unknown within 3 business days of remittance with unknown location of
beneficiary, request for receipt confirmation is waved and execute purchase considering it as ‘previous
transaction’
→In case verification document for acquisition route is not submitted for the foreign exchange
over USD 20,000 from foreign residents, purchase after reporting to president of Bank of Korea
(except purchase by inward remittance amount and withdrawal of foreign account)
→In case of purchasing foreign currency with unknown purpose of disposition from foreign
residents, purchase as ‘foreign asset intake fund’
3) In case of purchase over USD 10,000 (single borrower, single person), telegraphic notification to National
Tax Service within 10th of next month
• Case where inward remittance amount to resident (excluding foreign residents) is paid as foreign payment
instrument or deposited to resident account in name of person himself => same procedures as purchase
• Issuance of foreign exchange purchase certificate/receipt/calculation in case purchase from foreign resident –
limited to 1 time
(2) Foreign Exchange Purchase from Non-Residents
Foreign Exchange Purchase from Non-Residents
• Confirmation in Foreign Exchange Purchase
1) Confirmation on Personal Information
2)Confirmation on acquisition including carried-in foreign currency in current year (remittance receipt), etc
→ State purchase on foreign currency report (confirmation) certificate
→ Confirmation on acquisition route is waved for purchase of foreign payment instrument of less than
USD 20,000
→ Confirmation on acquisition route is waved for the non-resident exempted of report duty such as foreign
officials and consular (including diplomat) in Korea, international organization, US Army in Korea, Etc
→ Confirmation on foreign currency report (confirmation) certificate is unnecessary for withdrawal, purchase
from inward remittance amount and foreign account
→ In case verification document for acquisition rout is not submitted for the foreign exchange over USD
20,000 from foreign residents and non-residents, purchase after reporting to president of Bank of Korea
→ In case of purchasing foreign currency with unknown purpose of disposition from non-residents,
purchase as ‘foreign asset intake fund’
3) In case of purchase over USD 10,000 (single borrower, single person), telegraphic notification to National
Tax Service within 10th of next month
4) Issuance and transfer for foreign exchange purchase certificate /receipt /calculation => Issuance and
transfer to non-resident is limited to 1 time
5
(3) Sale of Foreign Currency
Sale of Foreign Currency
•Sales of Foreign Currency to Residents
1) Sale to be used in authorized transaction or payment
2) In case of selling to foreign residents, it is within amount prescribed in foreign exchange
transaction regulation Article 4-4 (payment of non-resident or foreign resident) of travel expense
within USD 10,000
3) Sale of foreign currency and T/C to citizen resident
4) Sale for deposit to resident account (no limit)
5) Sale of foreign exchange for transfer to other foreign exchange bank
→ restricted to authorized transaction in case of transfer to foreign account and foreign trust
account of non-resident
•Sale of Foreign Exchange to Non-Residents
1) With sales performance after recent date of entry :
→ It is within range of confirmed sales performance by foreign exchange purchase certificate and
details of remittance is stated on the same certificate
→ If there is entry and departure of non-resident after sales of foreign exchange or amount sold
with remittance to Korea before entry is not included in sales performance after recent date of
entry thus it is not subject of foreign remittance
→ Sales performance of foreign exchange by non-residents is limited to following cases
*Range of foreign exchange sales performance sold to foreign exchange transaction handling
institution, etc after recent date of entry
*Range of foreign exchange performance sold to overseas branch of foreign exchange bank,
local corporate, etc with domestic currency or T/C in won as its cost
*Advance service amount in won by Foreign issued credit card (debit card)
2) In case there is no sales performance : within USD 10,000 (statement in passport)
3) Within range of amount prescribed in Foreign Exchange Transaction Regulation Article 4-4
(payment of non-resident or foreign resident)
4) For foreign payment followed by authorized transaction
•Payment of Non-Residents or Foreign Residents
•For cases where verification document for acquisition route is submitted and confirmation of chief of
foreign exchange bank is received, payment is available when it falls under following cases.
1)Within range of received or carried-in foreign payment instruments from foreign countries
→ Restricted to received or carried-in foreign payment instruments after recent date of entry for
non-residents
→ Performance of spouse and linear ascendants or descendants is included for foreign residents
2) Within range reported to president of Bank of Korea
3) Domestic Pay (Income)
→ Subject designated by foreign exchange transaction bank
→ Request for verification document to prove pay confirmed by employer, etc: wage statement,
receipt for earned income tax withholding, etc
→ Certificate of Income, Certificate of Tax Payment ( in case of self-employed)
※ Submission duty of employment and income confirmation document is waved in case
accumulated payment is less than USD 20,000 per year
4) Social security & guaranteed benefits or pension
→ Remittance of social security, guaranteed benefits or pension and similar income in Korea
(Ex: Disability insurance from Korea Worker’s Compensation & Welfare Service, etc)
5) Consular revenue received by diplomatic institution in Korea and payment of other fee
6) Within range of sales performance of diplomat, ambassador, etc including the official residents of
foreign government, international organization, US Army in Korea, civilian employee, etc
7) Payment to official resident of foreign government, international organizations, diplomat, etc.
8) Payment of fund acquired in Korea followed by other authorized transaction
9) Within USD 20,000 yearly in case not falling under cause of 1)~ 8)
→ Designated subject of foreign exchange transaction bank (Remittance of domestic income is
same as designated bank)
6
4. Remittance in Foreign Currency
Remittance of Foreign Residents & Non-Residents
• Less than USD 20,000: not limit (single person, single borrower)
What is single person and single borrower?
In case a client requests for remittance several times a day, check whether or not total transaction amount in a day
exceeds the USD 20,000
• Over USD 20,000 : Limited to cases confirmed by foreign exchange report (confirmation) certificate and
statement of remittance on the same report (confirmation) certificate
• Remittance of foreign fund deposited to foreign account : no limit
5. Remittance in Won
(1)Remittance of Non-Residents in won
Remittance of Non-Residents in won
• In case there is sales performance after recent date of entry
1) It is within sales performance confirmed based on the foreign exchange purchase certificate,
etc, statement of remittance on the same certificate
2) If there is entry and departure of non-resident after sales of foreign exchange or amount sold with
remittance to Korea before entry is not included in sales performance after recent date of entry
thus it is not subject of foreign remittance
3) Foreign exchange sales performance of non-residents is limited to following cases
*Range of foreign exchange sales performance sold to foreign exchange transaction handling
institution, etc after recent date of entry
*Range of foreign exchange performance sold to overseas branch of foreign exchange bank, local
corporate, etc with domestic currency or T/C in won as its cost
*Advance service amount in won by Foreign issued credit card (debit card)
- Range of foreign exchange sales performance to foreign exchange transaction handling
institution, etc after recent date of entry
- Range of foreign exchange performance sold to overseas branch of foreign exchange bank,
local corporate, etc with domestic currency or T/C in won as its cost
- Advance service amount in won by foreign issued credit card (debit card)
- In case of non-resident including the diplomat in Korea, etc prescribed in Ordinance Article
10 Item ② Issue 1 and Issue 6, confirmation on identification with passport and amount in
confirmation of the person himself
• In case there is no sales performance
Within USD 10,000 (statement on passport) However, no limit for diplomat in Korea, etc
• Remittance of fund deposited non-resident free-won account
No Limit
Linear ascendants or descendants is family system within Korea.
(2)Remittance of Foreign Residents in won
Remittance of Foreign Residents
In Won
It refers to the ascendants including the mother, father,
grandfather, grandmother, etc and descendants including the
son, daughter, grandson, granddaughter, etc.
In case foreign residents (including the spouse and linear ascendants or descendants) demands the
payment within range of sales performance of foreign exchange, payment can be made regardless
of authorized transaction
7
Cases for reporting without restriction in sales performance
1) Remittance of domestic pay (income)
- Target for designated foreign exchange transaction bank
- Request for verification document to prove pay confirmed by employer, etc: wage statement,
receipt for earned income tax withholding, etc
- Certificate of Income, Certificate of Tax Payment ( in case of self-employed)
※ Submission duty of employment and income confirmation document is waved in case
accumulated payment is less than USD 20,000 per year
2) Payment of income including the social security, pension, etc
- Remittance of social security, guaranteed benefits or pension and similar income paid to
foreign residents in Korea
(Ex: Disability insurance from Korea Worker’s Compensation & Welfare Service, etc)
3) Payment of overseas travel expense
- Exchanged amount equivalent to USD 10,000 or less shall be indicated on passport and
indication can be waved for the sales of foreign currency equivalent to 1 million won or less
- Foreign residents with staying period in Korea of over 5 years can remit overseas staying
expense, study abroad expense
4) Inherited remittance of resident
- Limited to foreign residents with staying period in Korea of over 5 years
※Staying period in Korea of less than 5 years: No inherited remittance, payment available
within range of sales performance
8