Penalties for Violating the Foreign Exchange Transactions Act, and Strategies to Prepare Before a Police Investigation

 

"I received a notice to appear in connection with a violation of the Foreign Exchange Transactions Act."

  In such a situation, it’s only natural to feel momentarily stunned. In fact, many people who never imagined that a simple remittance for living expenses could be an issue only realize the seriousness of the matter after being contacted or summoned by the investigative authorities.   Most assume their transactions were simple remittances. However, if it is found that the method of transfer, account ownership, or process of delivering funds did not comply with the required procedures, the authorities may determine that a violation has occurred.   Recently, as illegal money transfers (unregistered currency exchanges) have increasingly been used for money laundering, investigations in this area have become much more stringent. Because of this complex regulatory environment, it is difficult for individuals to assess or explain their situation accurately on their own.   If you wish to clarify whether a violation actually occurred, it is essential to consult a legal professional early on and begin preparing a structured response from the very start of the investigation.    

Contents

 

1. Illegal money transfers — how certain transaction methods can lead to criminal prosecution.

 

2. In cases involving foreign nationals, criminal proceedings and immigration (residency) procedures are separate processes.

 

3. During the investigation stage, your evidence is your defense.

 

4. In conclusion: What must be prepared before the investigation begins is a clear response strategy.

   

1. Illegal money transfers — how certain transaction methods can lead to criminal prosecution.

  Illegal money transfers (unregistered currency exchange) involve sending or receiving foreign currency without going through official financial institutions. A common structure is receiving Korean won domestically and then providing the equivalent amount in foreign currency abroad. Such transactions often use a friend’s bank account or direct cash delivery, and these methods constitute violations of the Foreign Exchange Transactions Act, which can lead to criminal prosecution.   If capital transactions occur without proper reporting, the penalty can be up to one year of imprisonment or a fine of up to 100 million KRW.   If the act clearly constitutes illegal money transfer (unregistered remittance business), the law allows for up to three years of imprisonment or a fine of up to 300 million KRW.   Recently, with the rise of virtual asset–based remittance schemes, the Bank of Korea and the Financial Intelligence Unit (FIU) have been monitoring and tracing suspicious transactions in real time.   Even if a transaction appears to be a simple remittance on the surface, if a procedural violation is found, investigative authorities are likely to respond aggressively.   For foreign nationals, the consequences can extend beyond criminal penalties — potentially leading to visa renewal denial or deportation orders. Therefore, it is crucial to fully understand the issue and take prompt, strategic action from the earliest stage.    

2. In cases involving foreign nationals, criminal proceedings and immigration (residency) procedures are separate processes.

  Even after a criminal trial for violating the Foreign Exchange Transactions Act has concluded, foreign nationals are often subject to a separate immigration review.   Even if the case resulted only in a fine, once the amount exceeds a certain threshold, the person’s visa status may be re-evaluated. In many actual cases, this has led to visa extension denials or even deportation orders.   The Immigration Office assesses eligibility to remain in Korea based on factors such as:

• When the confirmed fine exceeds 3 million KRW,
• When the total fines over the past five years exceed 5 million KRW, or
• When the person has been sentenced to imprisonment or a suspended sentence.

  If any of these conditions apply, the immigration authorities will conduct a separate review of residency status, regardless of whether the transactions were simple remittances or involved elements of illegal money transfer.   Even if the individual explains that the remittances were merely to support family living expenses, if the pattern of repeated transfers or the flow of funds suggests intentional wrongdoing, it can still result in a deportation decision.   Because the immigration review is conducted independently of the criminal court’s outcome, it is essential to prepare for both processes simultaneously to ensure meaningful protection of one’s right to stay.    

3. During the investigation stage, your evidence is your defense.

  If you are being investigated on suspicion of violating the Foreign Exchange Transactions Act, simply repeating that you feel wronged won’t change the situation. From the very beginning of the inquiry, you must be able to explain the purpose and background of your transactions with objective documentation to avoid having them classified as illegal money transfers.   First, secure your account records related to the remittances and message logs. These are important materials to prove that the transfer was a one-time remittance with no commercial purpose.   You should also clarify the circumstances showing that the funds were not connected to voice phishing or illegal gambling. If necessary, consider reaching a settlement and obtaining a statement of non-punishment from the other party.   It is also helpful to prepare materials that can support mitigation, such as a letter of reflection, family petitions, and records of community service.   Because statements made during the police investigation are difficult to retract once the case moves to the prosecutor’s stage, you should proceed carefully from the outset. From the moment you receive notice of the investigation, working with a legal professional who can clearly understand the case flow and formulate a defense strategy will be beneficial for achieving a practical resolution.    

4. In conclusion: What must be prepared before the investigation begins is a clear response strategy.

  Even in cases that appear to involve only personal remittances for living expenses, violations of the Foreign Exchange Transactions Act may be deemed illegal money transfers if there are issues with the transaction route or method. Such violations can lead not only to criminal prosecution but also to visa cancellation or deportation review.   Investigative authorities primarily focus on the frequency of remittances, the pattern of fund flow, and the intent behind the transactions when determining whether an offense has occurred. Therefore, it is critical to establish a clear response strategy before receiving a summons or investigation notice.   For foreign nationals, cases involving violations of this Act require considering both the criminal investigation and immigration review simultaneously. The coordination of statements and strategic consistency between these two processes are essential.   Having two legal representatives—one with expertise in criminal law who can directly participate in the investigation, and another experienced in immigration procedures—working together from the start can make a decisive difference in the final outcome.