[1] Whether a resident has a duty to report under Article 16 of the Foreign Exchange Transactions Act in a case where he purchases goods from a foreign country after having a foreign means of payment, such as a foreign currency, which exceeds US$10,00,00, after having received a report or means of payment such as a foreign currency, and directly pays the price to a foreign country without going through a foreign exchange agency (negative)

[2] 5 - Relation to the grounds under each subparagraph of Article 11(1) of the Foreign Exchange Transaction Regulations

[3] The case holding that, in case where Japan, which had been in possession of US$10,00 or less and went into Korea or possessed, exceeds US$10,00,00 upon departure from Korea, the head of the competent customs office shall report to the head of the competent customs office and depart from Korea, and in case where the goods were purchased and paid for the purchase of goods in Japan and paid the price for the purchase of the goods in the United Nations and carried in the said goods at the time of return, each payment constitutes Article 5-11 (1) 4 of the Foreign Exchange Transactions Act and there is no duty to report under

[1] Article 16 of the Foreign Exchange Transactions Act, Article 5 of the Foreign Exchange Transactions Act (amended by the Ministry of Finance and Economy No. 2002-12 of July 2, 2002), Article 5-11(1)4 of the Regulations / [2] Article 16 of the Foreign Exchange Transactions Act, Article 5-11(1)4 and 8 of the Regulations on Foreign Exchange Transactions (amended by the Ministry of Finance and Economy No. 2002-12 of July 2, 2002) / [3] Article 16 of the Foreign Exchange Transactions Act, Article 5-11(1)4 of the Regulations on Foreign Exchange Transactions (amended by the Ministry of Finance and Economy No. 2002-12 of July 2, 2002)

[2] Supreme Court Decision 2004Do8435 Decided September 28, 2006 (Gong2006Ha, 1863)

Defendant

Defendant

Incheon District Court Decision 2004No2000 Decided October 20, 2004

The judgment below is reversed, and the case is remanded to the Incheon District Court Panel Division.

We examine the grounds of appeal.

1. Article 16 of the Foreign Exchange Transactions Act provides, “Where a resident falls under any of the following cases (excluding cases where a person who has obtained permission or has made a report under Article 18 by means of permission or report) with respect to the settlement of claims and obligations arising from transactions or acts between a resident and a nonresident or between nonresidents, he/she shall report to the Minister of Finance and Economy in advance, as prescribed by Presidential Decree: Provided, That this shall not apply to ordinary transactions which are determined by the Minister of Finance and Economy: Provided, That this shall not apply to cases where a resident makes a payment, etc. without going through a foreign exchange agency.” Article 16 subparagraph 4 of the main provision provides, “Where a resident makes a payment, etc. without going through a foreign exchange agency” and Article 19-9 of the Foreign Exchange Transactions Act enacted by delegation under the proviso of Article 16 of the Foreign Exchange Transactions Act (Article 202-12 of the Public Notice of Ministry of Finance and Economy of July 2, 2002; Article 511(1) provides, “Where a resident intends to make payment by means of foreign exchange without having been recognized foreign exchange” in a foreign exchange transaction:

2. However, if a resident who is a national departs from a foreign country in possession of means of foreign payment, such as foreign currencies of US$10,000 or less, and departs from the Republic of Korea in excess of US$10,00,00, it shall be reported to the head of the competent customs office (see Article 17 of the Foreign Exchange Transactions Act, Article 29(2) of the Enforcement Decree of the Foreign Exchange Transactions Act, and Article 6-2(1)3 and Article 2(2)2 of the Foreign Exchange Transactions Act enacted by delegation of the said Act). As such, it falls under US$10,00 or less and is exported without permission or report, or after filing a report exceeding US$11(1)4 of the Foreign Exchange Transactions Act, it shall not be deemed that the foreign exchange transaction is not a "authorized means of payment" under Article 5-11(1)4 of the Foreign Exchange Transactions Act, and there is no obligation to report or report under Article 22 of the Enforcement Decree of the Foreign Exchange Transactions Act as well as the Foreign Exchange Transactions Act.

Thus, even if a resident departs from a foreign country with a foreign means of payment such as foreign currency, which is above US$10,00,00 after having received a foreign means of payment such as US$10,00, or a report, and directly pays the purchase of goods in a foreign country without going through a foreign exchange agency, this constitutes “where a resident directly pays the price for a transaction recognized as a foreign means of payment which is held in a foreign country,” under Article 5-11(1)4 of the Foreign Exchange Transaction Act, and thus, there is no obligation to report under Article 16 of the Foreign Exchange Transactions Act.

3. Meanwhile, Article 5-11(1)8 of the Foreign Exchange Transactions Act provides that “Where a resident and a nonresident or a resident directly pays the price for ordinary transactions between a resident and a non-resident with a means of foreign payment not exceeding US$1,000 per transaction, it shall be exempted from the obligation to report under Article 16 of the Foreign Exchange Transactions Act.” Thus, in cases where a resident and a non-resident directly pays the price for ordinary transactions exceeding US$1,00 per transaction with a foreign exchange agency, not through a foreign exchange agency, the resident shall be obligated to report under Article 16 of the Foreign Exchange Transactions Act. However, the reasons under the subparagraphs of Article 5-11(1)8 of the Foreign Exchange Transactions Act are listed in the Minister of Finance and Economy even if payment is not required to report, and it is not necessary to comply with the obligation to report under Article 5-11(1)1 of the Foreign Exchange Transactions Act not to report under Article 16(2)4 of the Foreign Exchange Transactions Act, as seen earlier, Article 5-10(2)8(4) of the duty to report.

4. According to the records, where Japan, which possessed or possessed 10,00 U.S. dollars or less at each time of departure from Korea, exceeds 10,000 U.S. dollars, the defendant shall report to the head of the competent customs office and depart from Korea. The defendant purchased a Chinese professional projector, etc. in Japan, paid customs duties to the above Japan, paid the above goods, etc. at the time of departure from Korea, and carried them into Korea, and there is no evidence to deem that the defendant carried them out with the means of foreign payment, such as foreign currencies, etc., without due means under the Foreign Exchange Transactions Act. Thus, each of the above payment acts by the defendant constitutes Article 5-11(1)4 of the Foreign Exchange Transactions Act, and the defendant shall not be deemed to have obligation to report under Article 16 of the

Nevertheless, the court below affirmed the judgment of the court of first instance which found the defendant guilty of the facts charged of this case on the ground that even if there are circumstances such as Japan's transfer of Japan's goods to US$10,000 or less and the duty to report is exempted under Article 17 of the Foreign Exchange Transactions Act, it cannot be deemed that the obligation to report is exempted, and that the defendant's transaction does not constitute ordinary transactions for which duty to report is exempted by the Minister of Finance and Economy. The court below erred in the misapprehension of legal principles as to Article 16 of the Foreign Exchange Transactions Act, and the ground of appeal pointing this out is with merit.

5. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Sung-tae (Presiding Justice)