South Korea to Require Cross-Border Crypto Transfers to Be Reported to BOK FX Network

Cross-border virtual-asset transfers involving South Korea will soon have to be reported to the Bank of Korea’s foreign-exchange computer network and shared with the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the Financial Intelligence Unit.

The Ministry of Economy and Finance said on Oct. 7 it will publish a proposed revision to the enforcement decree of the Foreign Exchange Transactions Act to strengthen the management and oversight framework for cross-border virtual-asset transactions.

The proposal is a follow-up to amendments to the Foreign Exchange Transactions Act in June. It specifies the scope of a newly introduced category called “virtual asset transfer services” and sets out registration requirements for operators. The government plans to use the changes to strengthen the basis for tracing and monitoring illegal foreign-exchange transactions and unlicensed remittances using virtual assets.

The rules cover not only transfers between domestic and overseas virtual-asset service providers, but also transfers between domestic operators and personal wallets. Virtual-asset transfer operators engaged in such business will have to submit transaction-related information to the Bank of Korea’s foreign-exchange computer network.

Virtual-asset transfer data compiled by the Bank of Korea will be shared with the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the Financial Intelligence Unit. The key aim is to bring cross-border crypto transfers that take place outside traditional financial institutions into the authorities’ foreign-exchange oversight system.

The proposal also sets entry requirements for virtual-asset transfer operators. Companies must establish the computer systems needed to handle the business and secure at least two professionals with either at least two years of foreign-exchange work experience or relevant training.

Penalties for illegal remittances using virtual assets will also be strengthened. Money changers that violate foreign-exchange rules in connection with voice phishing, illegal trade-payment processing or unlicensed remittances using virtual assets could have their registration revoked after a single offense under a one-strike-out rule.

The Korea Customs Service’s foreign-exchange inspection scope will also be expanded. If signs of violations involving services or capital transactions are found during inspections of import and export deals, the agency will be allowed to inspect those related transactions without a separate procedure.

The ministry will accept public comments on the proposal through Oct. 26 before it undergoes regulatory review, examination by the Ministry of Government Legislation, and vice-ministerial and Cabinet meetings. The revised enforcement decree is scheduled to take effect on Dec. 3, when the amended Foreign Exchange Transactions Act comes into force.