The Era of 'Criminal Risk' Even for Overseas Transfers of Virtual Assets···The Foreign Exchange Transactions Act Has Changed

Attorney Jang Ji-woon, Daeryun LLC

With the passage of a partial amendment to the Foreign Exchange Transactions Act at the National Assembly plenary session last May, cross-border movement of funds using virtual assets has also come under the direct management and supervision system of the foreign exchange authorities. The core of this amendment lies in newly establishing 'virtual asset transfer business' as a separate registration target under the Foreign Exchange Transactions Act, and imposing an obligation to report related transactions to the electronic network. Overseas remittances and fund movements between overseas exchanges and wallets, which had until now been operated separately from the existing foreign exchange regulatory system, will in effect now be handled within the scope of institutional management.

The problem is that a considerable number of companies and operators are responding complacently under the perception that "there is no problem since we completed the reporting under the Act on Reporting and Using Specified Financial Transaction Information (the Specific Financial Information Act)," or that "it is merely a simple wallet transfer." This amendment includes within the scope of regulation not only simple trading and exchange acts but also cases where substantially the same effect occurs. Circumvention transactions using overseas exchanges, stablecoin-based overseas settlements, and OTC (over-the-counter) transfers are all potential regulatory targets. According to Article 27-2, Paragraph 1, Item 1 of the Foreign Exchange Transactions Act, if unregistered business continues without awareness of this, one may face 'imprisonment of up to 3 years or a fine of up to 300 million won.' Virtual assets constituting criminal proceeds from the violation may also be subject to confiscation and collection, so a single incident is a serious risk that can shake the very foundation of a business.

Therefore, individuals, companies, and virtual asset operators conducting cross-border transactions using virtual assets must comprehensively re-examine all forms of foreign exchange transactions—such as ongoing overseas investment projects, settlement structures between global corporations, and stablecoin payment systems—based on 'economic substance.' Above all, even companies that have completed their Virtual Asset Service Provider (VASP) reporting under the existing Specific Financial Information Act must never be complacent. If they operate a structure of overseas wallet deposits and withdrawals or stablecoin-based transfers, they must be sure to check whether registration with the Minister of Economy and Finance is required. Along with this, they must closely review the obligation to link to the electronic network with foreign exchange information concentration institutions such as the Bank of Korea, and reorganize a tight compliance system in order to prevent judicial risk.

Furthermore, this change is not limited to the strengthening of domestic regulation. In tandem with the stablecoin institutionalization movements in the U.S. and Europe and the global cooperation system of the Financial Action Task Force (FATF), virtual asset regulation is on a trend of expanding into an even tighter international cooperation system. Now, one must consider not only the Foreign Exchange Transactions Act but also anti-money laundering (AML), foreign exchange tax law, and customs regulations together to establish a multidimensional cross-border risk management strategy. As the cross-border transaction environment using virtual assets changes rapidly, meticulous legal review and preemptive compliance building are more important than anything else in protecting assets and business under the strengthened regime.

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The Era of 'Criminal Risk' Even for Overseas Transfers of Virtual Assets···The Foreign Exchange Transactions Act Has Changed (Go)