The Foreigner Supervisory Service?

The Financial Supervisory Service (FSS) has produced a brochure Ten Helpful Hints for Making Financial Transaction in Korea. 

Let's go through the 10 hints they make:

1. Provide proof of identity when you open a bank account. Okay, but they are saying that Alien Cards will no longer be accepted as proof.  I have mixed feelings about this.  Many people prefer to use their drivers licence as it prevents a lot of you can't you're foreign excuses.  However for those that don't drive, carrying passports around is risky. The fine for losing an Australian Passport is AUD$100 in the first instance plus the cost of a replacement passport is AUD$226.  I don't want to carry my passport outside the house unless it is vital.  The rationale behind this is that an Alien Card cannot be verified, I'm sorry but this is not true.  Verification of Alien Cards happens and is possible under the Telecommunications Act;
2. Designate a correspondent bank for foreign exchange transactions, I have not given up hope that someone will explain the sense of this regulation one day, as it is completely pointless, anti-competitive and discriminatory;
3. Use Internet banking and specialised remittance service, this is a good tip.  Transferring money in branch inefficient and inconvenient;
4. Get a debit card instead of a credit card, getting even a debit card can be difficult and there is a difference, I suggest shopping around for what you want;
5. Enroll in foreign worker insurances and get your insurance money, good hint, but usually employers are the main offenders for not registering for these insurances.  Avoid the independent contractor scam;
6. Take out private insurance for additional coverage, a good hint, but the FSS says that refusing to sell insurance to foreigners who cannot prove Korean language ability is legal.  Yes it makes sense, to a point, but will you deny my Korean wife and daughter the benefits of insurance because I cannot speak Korean?
7. Note that a variable insurance is a dividend-paying policy based on investment performance, say no to these policies. In the words of P.J. O'Rourke complexity beyond a certain point is fraud.  Unfortunately Koreans love this type of policy where you pay your insurance and you get a lump of money in 10-20 years.  I am taking a bath on the policy my wife likes, it's expensive and should anything happen to me it doesn't provide for my wife and daughter.  Luckily I still have some Australian insurance coverage;
8.  Show proof of auto insurance subscription abroad to get discount on Korean auto insurance, great tip; 
9. Apply for an investment registration certificate (IRC) at the FSS to trade Korean listed stocks, more pointless paperwork;
10. Click on online sources of information on Korea’s capital market, see my sidebar.

What's in a number?

One of the frustrations of many foreigners in Korea is that our ID numbers won't work with many computer systems as they are different to Korean's ID numbers.  A Korean ID number takes the form of YYMMDD-XYYYYYY where X is 1, 2, 3 or 4 for most Korean citizens, 5 or 6 for foreigners, and 7 is a specific number allocated to people who make international transactions, to allow the tracing of all transfers without the need for stupid foreign exchange bank declaratory forms.

Korean citizens who hold permanent residency in another country lose their original number and have to apply for a 5 or 6 number, the logic for which escapes me.

I don't want a new number, I want my number to work.  If you go somewhere and they tell you they can't handle your ID number, make some noise, I do.
 

Korean Base Rate Raised to 3.25% - Credit Card Companies Also on Notice.

The Bank of Korea raised it's base rate 25 basis points to 3.25% on June 10th (sorry it's late).

Of more concern to the Korean economy is the Financial Supervisory Services notification to credit card companies that they want them to curtail their debt issuance and marketing expenses.  The FSC is threatening weekly inspections and bans on new card issuance should the companies not comply.  Korean household debt is running at high levels.  Hopefully everyone in Korea has learned from the last credit card crisis.

Internet Banking in Korea

Due to the absence of personal cheques and the former maximum won note being w10,000 (approximately USD$9.34 on May 3rd at 1.34pm) Internet Banking is a very popular way to pay bills and manage money in Korea.

With Internet Banking it is possible to instantly transfer money to anyones account in Korea, it is also possible to send money abroad, open new accounts, and review your transaction history depending on your bank and their policies.

To get Internet Banking you will need to visit a bank branch and register for Internet Banking not all banks offer English Internet Banking so if you don't know Korean, you will need to change banks.  If they tell you can't have Internet Banking  for 3 months you can call the bank's English helpline, or just leave and find another bank or branch that has adequately trained their employees.

When you have registered you will need to log in and download a certificate onto your computer.  Many banks tend to only operate on Internet Explorer and Windows, although this is changing Mac users probably won't be able to use Internet Banking.
Once you have a certificate you can use it with other banks as well provided that you have registered with them for Internet Banking.  The certificate will also allow you to logon to the National Pension Office, the National Tax Service and many other useful webistes, so guard your certificate and password carefully.

If yoiu have registered that your bank is your primary foreign exchange bank you will also be able to complete overseas trnsfers from the comfort of your own home.  This can be useful for people that find visiting a branch difficult although you will need to visit a branch at least once.

Banking Scams

Living in Korea is very safe and this safety can lead to a sense of complacency. Financial fraud through scams is a problem and here I will warn of some of the most common and how to avoid them. The Korean Police take scams very seriously, however as in all countries recovery rates are low.

The 2 Bankbook Scam

Your employer will ask you to open a separate bank account and get an ATM card and give it to them with the PIN. They may even tell you this is normal in Korea. It is not, it is illegal. This scam is popular with some recruiters and companies because they get payments paid into your bank account and then withdraw cash to pay you and themselves tax free. They get tax free money because you are liable for the tax on the whole amount. This violates the real name transaction laws in Korea, and leaves you personally liable to large tax bills. Do not ever give anyone your bankbook, card and PIN.

The Cheap Good Online in a Remote Part of the Country

A cheaper than normal good is advertised online. You reply to the ad and they negotiate a deal where if you transfer money to their bank account, they will ship the good to you from the remote part of the country. You transfer your money and then wait but the good never arrives. The best way around this is to either get on a bus and go and meet the person or only pay COD which can be arranged by courier companies.

Voice Phishing

You get a phone call telling you to pay money into a bank account. The caller may present themselves as a banker, a public servant, or a kidnapper. They may even tell you it's to avoid being robbed. Do not transfer money to people whom you don't know. Banks can freeze an account that is at risk, they don't need you to transfer money to another account.

Internet Phishing

Your bank sends an email asking you to click a link to confirm your details including name and password. Do not click the link. Banks do not send emails asking for security details.

Card Skimming

This can be done at an ATM or by a merchant at POS. Your card is read and recorded on a separate device and a concealed video camera records your PIN. Never use an ATM that has a strange looking card reader, and hide the keypad under your hand, bankbook or wallet when entering your PIN.  Also remember that debit(check) and credit cards can be used without a signature or with minimal checking of the signature, do not have your life savings in a checkcard account and do not carry too many credit cards.

Letter, Email Scams

Hello, I don't know you and I want to give you half of $10 million dollars. We have all seen these emails, the writer wants to empty a large unclaimed bank account but of all the people in the world they want you to help them. Either that or “congratulations”, you have won a lottery you never entered. These emails have 2 purposes to either gain all of your personal information to commit identity fraud or should you wish to proceed, they will ask for money to help cover costs incurred in recovering the money. Do not respond to these emails, living abroad we are particularly vulnerable to identity fraud in our home countries.

Identity Fraud

By gaining personal information about you, fraudsters will either empty your bank accounts, or apply for credit in your name, which they will never repay. Be careful who you give your details to, including passport, drivers license, ID number, bank and workplace.

Have you been a victim of any of these scams or can you add to this article? Write to koreanbankingblog@gmail.com

A Good Day to Finish Early

Well it's Thursday.  Many years ago I was advised by a very senior public servant in Australia that Thursday is a good day to finish at lunchtime and go to play golf.  His rationale was that if then stayed in your office until 6.30pm on Friday night,  everyone would think you were a hard worker.

Unfortunately that doesn't work for me in Korea.

I haven't written for the blog today, but I did write to FN Hub Korea to clarify the policy for international residents to remit money home and hold international access cards.  I hope to get a response next week to share with you.

I hope that you are now on the golf course, or at least the 19th hole.

International Transfer Rules for International Residents in Korea

Several years ago, I wanted to transfer a couple of hundred dollars home to pay some small bills.  I went to the local bank where the teller told me that it would be impossible without bringing proof of income, he then proceeded to show me what the proof should look like by producing an income statement that another customer had provided, the punchline was I knew the customer although I hadn't previously  known his income.

Why is it so hard to transfer money home?

1. In Korea there was a cultural aversion to importing.  Until 1986 foreign cars and cigarettes were illegal.  If you work in Korea and send the money home, your service is an export from your home country, older people may think this is wrong, although if you look at the young, this has changed fast;
2. Like many currencies in the world the Korean Won is subject to exchange controls;
3. A complicated legal and regulatory framework;

The easiest thing to do is take your passport, ARC, proof of employment and housing to the bank when you open the account, register this bank as your primary foreign exchange bank and register for online transactions, then you can transfer money home by ATM or Internet Banking.  If you do this you can transfer, spend or withdraw a total of US $50,000 a year.

This process is cumbersome, anti-competitive and unnecessary but it is the rule.