South Korea to ease foreign exchange regulations next year

The policy is to liberalize foreign exchange transactions and activate both domestic and foreign investments. [Source : Gettyimagesbank]

The South Korean government plans to introduce a new foreign exchange rule that will remove the $50,000 annual limit on money transfers from the country for individuals.

The policy is to liberalize foreign exchange transactions and activate both domestic and foreign investments.

According to the government on Monday, the Ministry of Economy and Finance will provide an overview of the New Foreign Exchange Act, which will replace the existing rule, by the end of this month. The new regulations will go into legislation and come into effect in the second half of next year at the earliest. It is the first time in 24 years since the last overhaul of the foreign exchange law in 1999.

The basic purpose of the New Foreign Exchange Act is to abolish the prior reporting duty for capital transactions and to ease foreign exchange transaction regulations significantly.

The purpose of the current rule was to control the outflow of foreign currency. Under the regulation, individuals can freely transfer up to $5,000 overseas, but if the cap is exceeded, the transfer must be made only after a foreign exchange bank is designated. Prior to money transfer, individuals must report the reason for remittance and proof of the amount.

The New Foreign Exchange Act is intended to provide a new rule that meets global standards. The biggest change is the removal of mandatory prior reporting of foreign exchange transactions for studying abroad, traveling or remittance between individuals.