Government Requests Banks to Frequently Manage Cryptocurrency Boom
[Asia Economy Reporter Ki Ha-young] Financial authorities have acknowledged institutional shortcomings regarding the issue of overseas remittances involving cryptocurrencies such as Bitcoin and are reportedly considering the establishment of guidelines.
According to the financial industry on the 18th, on the 16th, the Foreign Exchange Supervision Department of the Financial Supervisory Service held a meeting with heads of foreign exchange departments from commercial banks via a non-face-to-face method, focusing on the topic of 'cryptocurrency foreign exchange remittances.'
This is because a significant portion of the recently surged overseas remittance amounts is estimated to be related to cryptocurrency transactions. It is suspected that both domestic and foreign individuals have been sending money to purchase Bitcoin at lower prices on overseas exchanges or bringing in Bitcoin to sell at domestic exchanges to earn the price difference and then transferring the proceeds overseas.
Accordingly, since the 9th, commercial banks have issued guidelines to frontline branches to refuse transactions when individual customers (including foreigners) who have no prior dealings with the bank suddenly request remittances up to the maximum amount allowed without supporting documents?approximately USD 50,000?or when foreigners request remittances to countries different from their passport nationality.
However, since laws or regulations related to cryptocurrencies are currently unclear, banks are managing the situation by applying regulations related to dispersed or nominee remittances used for general money laundering or illegal transactions.
At this meeting, authorities reportedly stated that "each bank responded promptly" and acknowledged that "the definition of cryptocurrency under the Foreign Exchange Transactions Act is unclear, and there are institutional loopholes regarding related remittances. We plan to consult with government ministries, but it is difficult to implement a system in the near future."
Regarding conflicts between customer demands at business sites and legal grounds, they expressed an intention to "consider providing guidelines from the Financial Supervisory Service on how to handle such cases." Under the Foreign Exchange Transactions Act, remittances up to USD 5,000 per transaction and USD 50,000 annually can be made overseas without supporting documents for the reason of remittance. However, banks currently tend to block even remittances below this threshold if they suspect they are related to cryptocurrencies. As a result, disputes between customers and frontline bank branches over recent overseas remittances have become frequent.
Not only the Financial Supervisory Service meeting but also the recent cryptocurrency investment boom has led the government to urgently contact banks repeatedly. It is also known that the swift instruction for commercial banks to refuse suspected cryptocurrency-related foreign exchange remittances over 3 to 4 days after the 9th was actually at the government's request. According to the banking sector, on the 8th, the Ministry of Economy and Finance mentioned this cryptocurrency remittance issue during a meeting on foreign exchange transaction regulations attended by bank officials and urged management of the matter.
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