1,072 Cases of Foreign Exchange Transaction Violations Last Year: "Even a $1 Investment Must Be Reported"

979 Administrative Sanctions, 93 Cases Referred to Investigative Authorities

Companies Account for Half, but Violations by Individuals Are on the Rise

Last year, the number of violations of the Foreign Exchange Transactions Act by individuals and companies exceeded 1,000, resulting in administrative penalties such as fines and notification to investigative authorities. In particular, the most common cases involved violations regarding failure to fulfill reporting and notification obligations in the course of overseas direct investment.

According to the Financial Supervisory Service on July 14, 2026, a total of 1,072 cases of foreign exchange transaction violations were detected by the agency in 2025. Of these, 979 cases faced administrative sanctions, such as fines or warnings, while the remaining 93 cases were reported to investigative authorities.

Although the total number of sanctions decreased compared to the previous year (1,137 cases), it still remains high compared to 2022 (702 cases) and 2023 (786 cases).

By party, companies accounted for 631 cases (58.9%), while individuals were responsible for 441 cases (41.1%), indicating a higher share for companies. However, administrative actions against individuals have been steadily increasing: 317 cases in 2022, 341 in 2023, 386 in 2024, and 441 last year.

By type of transaction, overseas direct investment accounted for the largest portion with 478 cases (44.6%), followed by monetary loans with 161 cases (15.0%), real estate transactions with 97 cases (9.0%), and securities transactions with 88 cases (8.2%).

In terms of the type of violation, failure to fulfill the obligation for new declarations accounted for more than half, with 577 cases (53.8%). This was followed by violations related to changes in declaration or reporting obligations (372 cases, 34.7%) and violations of post-reporting obligations (99 cases, 9.2%).

Specific examples include a case where an existing overseas direct investment in a local Chinese subsidiary resulted in its retained earnings being converted into capital for an additional investment, but the report was not submitted to the foreign exchange bank within three months. The Financial Supervisory Service explained that, according to regulations, even if only one US dollar is invested or additional investments are made in overseas direct investments, a prior declaration or reporting within the deadline to the foreign exchange bank is required in principle, and reporting and declaration obligations arise even if no actual fund movement takes place, such as in the case of capital conversion.

In monetary loan transactions, there were cases where loan maturities for overseas subsidiaries were extended without submitting a change declaration. In overseas real estate transactions, there were instances where a disposal report was not submitted after selling US real estate. In securities transactions, cases were identified where the prior declaration was omitted when acquiring shares of a US corporation.

A Financial Supervisory Service official stated, "Some individuals and companies face disadvantages because they are not fully aware of the reporting and declaration obligations stipulated in the Foreign Exchange Transactions Act. We will provide guidance on the major types of violations and points for caution, and we will encourage financial institutions and banks to fully inform customers of their legal obligations when handling foreign exchange transactions."

This content was produced with the assistance of AI translation services.