Overseas Remittance Limit Without Documentation Increased from $50,000 to $100,000 Annually Starting July

Advance Notice of Amendment to Foreign Exchange Transaction Regulations
Expansion of Large-Scale Foreign Currency Borrowing to 50 Million Dollars

Starting in July, the amount that can be sent or received overseas in foreign exchange transactions without submitting supporting documents or prior notification will be expanded from $50,000 to $100,000 annually. The reporting threshold for large-scale foreign currency borrowings by companies will also be raised from $30 million to $50 million per year, and the abolition of ad-hoc reporting for overseas direct investment will be pursued.

The Ministry of Economy and Finance announced on the 8th that it will conduct an administrative notice for the "Foreign Exchange Transaction Regulation Amendment" containing these details. This amendment was prepared to specify the key tasks of the "Foreign Exchange System Reform Direction" announced in February this year, aimed at easing foreign exchange transaction procedures and regulations.

Specifically, to alleviate inconveniences in everyday foreign exchange transactions for citizens, the overseas remittance and receipt amount threshold will be doubled to $100,000 without requiring separate document submission or prior notification for capital transactions. The 31 types of capital transactions that previously required banks' prior notification, such as head office guarantees for local borrowings by securities firms' local subsidiaries, will be converted to post-reporting.

To expand convenience for corporate foreign currency procurement, the reporting threshold for large-scale foreign currency borrowings to the Ministry of Economy and Finance and the Bank of Korea will be raised from $30 million to $50 million annually. Foreign exchange banks only need to submit post-reports for foreign currency borrowings within $50 million per year. Additionally, the abolition of ad-hoc reporting for overseas direct investment will be pursued.

[Image source=Yonhap News]

Regulations related to local finance will be abolished and integrated into loans and guarantees. The restriction on domestic deposit of borrowed funds will be relaxed to expand autonomy in managing foreign currency funds. Through this, although overseas local borrowings via local finance were generally not allowed to be brought into the country, domestic import will be permitted going forward.

Furthermore, general foreign exchange transactions between large securities firms and customers will be allowed. Currently, only four securities firms with over 4 trillion KRW in equity capital and short-term finance business licenses can conduct general foreign exchange transactions for corporations, but going forward, nine securities firms (comprehensive financial investment business operators) will be able to conduct general foreign exchange transactions for citizens and corporations. This is a measure to strengthen financial institutions' competitiveness in the foreign exchange sector and expand consumer choice.

The domestic foreign exchange procedures for foreign investors will also be simplified. Foreign investors will be able to exchange foreign currency and invest in domestic securities immediately without the need to pre-deposit foreign currency funds domestically. The Ministry of Economy and Finance stated, "To enhance procedural legitimacy in legal interpretation through collecting diverse opinions from related agencies, industry, and academia, a Foreign Exchange System Development Deliberation Committee will be established."

The amendment will undergo administrative notice from today until the 18th and is scheduled to be implemented in July.