Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Preventative system on FX irregularities launched
The Financial Supervisory Service's headquarters on Yeouido, Seoul / Korea Times file
By Kim Bo-eun
By Kim Bo-eun
The Financial Supervisory Service (FSS) said Tuesday that it will work with banks to use information technology to prevent customers and banks from violating foreign exchange regulations.
"Because foreign exchange regulations are complex, people are mostly unaware that certain laws and rules have been violated during overseas transactions of assets including real estate," an FSS official told reporters in a briefing.
The number of administrative measures taken against violators of foreign exchange regulations grew from 567 in 2016 to 1,097 in 2017 and to 1,279 in 2018.
These include warnings, fines and suspensions of transactions, as well as criminal charges filed with the prosecution.
"The scale of violations has tied the hands of officials in charge, leaving them unable to perform other duties," the official said.
Banks will start to use “regtech” to prevent violations. Regtech refers to utilizing information technology to enhance regulatory processes.
Data shows 56.7 percent of the violations of foreign exchange regulations that required administrative measures were for failing to report transactions.
The system will help banks identify which customers need to report their transactions and also aid the notification process, to prevent them from violating regulations and also prevent banks from failing to carry out their duties.
Ten banks including KEB Hana, Woori, Shinhan, KB Kookmin and Citibank Korea will begin setting up the system in the latter half of the year. DGB Daegu Bank and the Industrial Bank of Korea will begin preparations in 2020.
People engaging in overseas direct investment or those who purchase overseas real estate need to report this to the Bank of Korea or banks offering foreign exchange services before and after transactions are made. But many fail to do so because they are unaware of this regulation.
Banks, meanwhile, have the duty to notify customers who need to report their transactions, but they haven't been doing so due to the absence of a proper system. This has subjected banks to penalties as well.
When customers failed to report, banks sent out notifications through mail, but this has proven to be ineffective.
The system implemented at banks will automatically identify the subjects who need to report through algorithms, based on factors including the amount of transactions.
The system will also notify customers of deadlines they need to report by after making transactions through text messages, emails, phone calls and mail.
"More banks stated they will incorporate the system than we expected," the FSS official said. "The system is cost-effective because it utilizes existing systems at banks.”