[Background]
A. In accordance with the "Roadmap for the Internationalization of the Won" (July 19), an initiative is being promoted to create an environment where foreigners can freely use the Korean Won overseas.
- It stipulates provisions regarding the registration and cancellation of registration for "Offshore Won Business Institutions" acting as offshore Won trading entities.
- If a registration obligation is not imposed on offshore Won trading entities, it may raise equity issues with domestic foreign exchange banks that are registered as foreign exchange business institutions under the Foreign Exchange Transactions Act.
B. Stipulating verification and reporting obligations under the Foreign Exchange Transactions Act for "Offshore Won Business Institutions" acting as offshore Won trading entities.
- While granting special exceptions—such as permitting offshore Won transactions by foreign financial institutions and liberalizing capital transactions among non-residents—it is necessary to impose minimum verification and reporting obligations. This is required for monitoring purposes, given concerns that offshore Won transactions could be utilized as a means of tax evasion and money laundering.
- Failing to impose even the minimum verification and reporting obligations on offshore Won trading entities could also cause equity issues with domestic foreign exchange banks, which verify and report matters related to payments in accordance with the Foreign Exchange Transactions Act.
[Main Points]
A. To register as an Offshore Won Business Institution, registration with the Ministry of Economy and Finance is required, accompanied by the existing Registered Foreign Institution (RFI) certificate and domestic currency account information.
- It includes underlying provisions that allow for corrective orders or the cancellation of registration if the institution operates beyond the permitted scope of the offshore Won business.
B. Offshore Won Business Institutions must verify whether the counterparty customer is a non-resident and report transaction details to the Bank of Korea by the 10th of the following month.
- Offshore Won Business Institutions must report to the Ministry of Economy and Finance, etc., when designating a proxy agency.
