Illegal outflow of foreign currency surges

It has been found that the number of illegal transactions relating to the remittance of foreign currency overseas is surging. According to a report submitted to the National Assembly by the Korea Customs Service, up until July this year there were 125 illegal transactions recorded worth a total of 1,287.5 billion won. For the same period last year, there were 109 cases recorded worth 868.2 billion won. In terms of the number of transactions, an increase of 15% was recorded and in monetary terms an increase of 48% was posted. In 1999, a total of 181 cases worth 913.8 billion won were uncovered. In particular, the outflow of foreign currency is anticipated to increase further next year as the second round of foreign exchange transaction liberalization will abolish remittance and travel expense limits.

By category, transactions disguised as trade-related deals totaled 542.6 billion won with 4 cases. Following was the failure to recover receivables at 290.3 billion won (8 cases), foreign exchange transactions at 24.7 billion won (60 cases), travel expenses at 8.2 billion won (34 cases) and price fixing at 1.3 billion won (2 cases). One trading company had opened 149 import LCs from 1995 to 1998, claiming to import leather. The company used fake air bill documents to transport U$82 million overseas.

One manufacturing company fixed the prices of materials imported from its local U.S. subsidiary. Illegal gains were made by fixing the import price at US$281 per ton when it was originally US$261 per ton.