South Korea revises rules for foreign institutions to promote won convertibility

South Korea on Wednesday announced revised rules for registered foreign institutions (RFIs) as part of the ongoing effort to make the won a freely convertible currency, the finance ministry said.

The Ministry of Finance and Economy said it revised the guidelines on foreign financial institutions' foreign exchange operations and the foreign exchange transaction regulations following a public comment period and a regulatory review by the Office for Government Policy Coordination.

Under the revisions, foreign financial institutions registered with the ministry will be able to open omnibus accounts at domestic foreign exchange banks and settle won transactions through the Bank of Korea Won International Wire Network, enabling offshore won settlement without time or location constraints.

Registered foreign institutions wishing to conduct offshore won business must separately register with the finance ministry as a Registered Foreign Institution for KRW Business (RFI-K).

Institutions with such registration can serve clients not residing in South Korea, enabling them to open won-denominated accounts and conduct remittances, investments and lending and borrowing transactions.

Such institutions must verify their clients' foreign nonresident status and submit monthly transaction reports to the central bank.

The government will conduct necessary reviews of the institutions' financial soundness and closely monitor their transactions in cooperation with the central bank, the finance ministry said.