South Korea revises rules to let foreign banks settle won overseas via new network

On September 16, the Ministry of Finance and Economy released revised regulations governing foreign financial institutions registered in South Korea as part of the country’s plan to make the won freely convertible. Following a public comment period and a review by the Office for Government Policy Coordination, the new rules permit registered foreign institutions to open omnibus accounts at local foreign-exchange banks and to settle won transactions through the Bank of Korea’s Won International Wire Network, removing time and location limits on offshore won settlements.

Institutions wishing to conduct such business must obtain a separate registration as a Registered Foreign Institution for KRW Business (one outlet-K), which enables them to serve non-resident clients, open won-denominated accounts, and handle remittances, investments, and lending. They are required to confirm the foreign non-resident status of clients and submit monthly transaction reports to the central bank. The finance ministry will assess the financial soundness of these institutions and work with the Bank of Korea to closely monitor their activities.