Banks to limit overseas foreign remittances

Measure taken to prevent increasing crypto-related fraud

Woori and NH Nonghyup are putting limits on the amount of money that can be wired overseas by foreign-national account holders in Korea, a measure they say is crucial to preventing crimes related to cryptocurrencies increasingly being used by organized crime for shortterm, windfall gains at the expense of young investors.

These lenders seek a monthly limit for overseas bank transfers of up to $10,000 (11.1 million won), following several reports of crimes involving virtual assets. Cryptocurrency investment is emerging rapidly as a viable alternative to equity and real estate investment. Investing in cryptocurrencies is a byproduct of a desperate yet understandable scheme for making money, while the financial authorities are still scrambling to figure out how to regulate the industry.

NH NongHyup Bank said Tuesday foreign national account holders will not be able to send more than $10,000 per month to overseas accounts online.

If their transfers are mediated by a bank worker, the limit will be raised to a onetime $50,000 transaction and $50,000 per year.

The new restriction will, the bank says, help prevent suspicious overseas transfers, including foreign national account holders sending large sums of money to buy digital coins on overseas exchanges at lower prices, just to sell them back here for cheaper and pocket the difference. The measure was also in response to growing calls for tighter scrutiny on non-resident foreign nationals buying apartments, after some account holders from China were found to have bought several apartments worth billions of won in Seoul, with cash wired by China-based organized groups that netted gains by selling bitcoins at a higher price to Korean citizens.

They were able to evade customs authorities’ monitoring because they used electronic wallets, an online cash-wiring system not subject to mandatory reporting of the total amount transferred.

Under the related laws governing foreign currency trading, or exchanges of foreign capital, those who fail to report capital transactions exceeding 1 billion won face up to one year in prison or up to 100 million won in fines. Amounts less than 1 billion won must be reported to the customs authorities, or the trader faces a fine equivalent to 2 percent of the amount over the limit.

Meanwhile, an investigation is ongoing into 10 organized crime groups that are suspected of having wired a total of 1.4 trillion won without reporting it to the authorities over the past few months. Some of the money was used by 14 non-resident foreign nationals who bought a combined total of 15 apartments here.

According to CoinMarketCap, a virtual currency data service provider, a total of over 24.1 trillion won was traded at 14 exchanges that support transactions using the Korean currency in a 24-hour period, April 15. This total exceeded the average daily trading volume of individual investors on the KOSPI index, which surpassed 19 trillion won on that same day.