South Korea updates rules for foreign financial institutions
South Korea has revised the operating rules for registered foreign financial institutions in the foreign exchange market. The changes are part of government efforts to make the won a freely convertible currency, Korea Herald reports.
New opportunities for institutions
The Ministry of Economy and Finance amended the guidelines on foreign exchange operations of foreign financial institutions, as well as foreign exchange transaction rules. Before that, the document underwent public consultation and regulatory review at the Office for Government Policy Coordination.
Foreign financial institutions registered with the ministry will be able to open omnibus accounts at Korean banks authorized to conduct foreign exchange operations. They will also be able to settle transactions in won through the Bank of Korea Won International Wire Network. This will make it possible to settle transactions in won outside the country without restrictions on time and place.
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Registration for won transactions
Institutions planning to work with the won outside South Korea must separately register with the ministry as a registered foreign institution for KRW operations (RFI-K). Such institutions will be able to serve clients who do not reside in South Korea, open won accounts for them, conduct transfers and investments, and carry out lending and borrowing transactions.
Oversight of transactions
Institutions registered as RFI-K must verify their clients' status as foreign non-residents and submit monthly transaction reports to the Bank of Korea. The ministry said it would assess the financial soundness of such institutions and, jointly with the central bank, oversee their operations.
