Obligation to Report Cash Transactions Exceeding 50 Million Won Gets Underway

Starting in the latter half of the following year, a measure that financial institutions are required to report to the government all cash transactions exceeding 50,000,000 won has been in progress.

The Ministry of Finance and Economy (MOFE) revealed on Thursday that a revision for “A Law on Report and Usage of Information on Special Financial Transactions,” which mainly contains “An Obligation to Report Cash Transactions Involving a Large Amount of Money” among other bills, has been consented to in a vice-minister’s meeting.

According to the revision, financial institutions are under obligation to report to the Financial Intelligence Unit (FIU) under the MOFE for the cash transactions exceeding 50,000,000 won, along with personal information of those who perform such transactions.

The law also applies to a situation where a person breaks up a transaction of 50,000,000 won into several transactions within a certain period, not to exceed 50,000,000 won per transaction.

The government will scrutinize the illegality of tax evasions, bribery, etc. through such information.

Moreover, the FIU has provided information of financial transactions related to political funds only to the National Election Commission up until now. However, the FIU will also report such information to the Supreme Public Prosecutor’s Office, the National Tax Service, and the National Police Agency hereafter.

The MOFE plans to submit the revision to the National Assembly at the end of this month, and it anticipates the revision to take effect from a following year of the latter half after one year of deferment.

Meanwhile, a revision on “A Law on Indirect Investment Asset Management Firms,” which contains the introduction and the activation of private equity funds (PEF), was also been approved at the meeting.

The revision contains a clause that excludes regulations on its holding company with respect to a PEF for 10 years after its investment instead of its original clause, which stipulates the exclusion of regulations completely.

Moreover, when a bank or an insurance company obtains 15% of PEF shares, it needs to be approved by the Financial Supervisory Commission.

Chi-Young Shin higgledy@donga.com