Ins and outs of transferring cash out of Korea

[Daniel Costello on Finance] Ins and outs of transferring cash out of Korea
The Korea Herald



Ten years ago the best way to get a large sum repatriated from Korea was to bring a trusted Korean friend along to the bank to conduct the transfer in his or her name.
The documentation in a currency transfer protects you from the risk of dual taxation and ensures the legality of your transaction tomorrow when your host country's bank might wonder about its origin. The sight of a Korean bank teller marking totals in your passport can be disconcerting, yet it is to your benefit. It is added proof that your remittance was made and registered legally.

Monthly wire transfers of legally earned and saved income appear a wise method of remittance. By regularly sending money home you minimize your vulnerability to wild currency swings. You would also minimize your exposure to a, hypothetically speaking, steadily sinking won.

This is the same concept as making monthly payments on outstanding accounts owing and is also the same argument made for monthly investment plans. Lump sum transfers are tax free in your home nation only if they represent earned income alone.

Moreover, a lump sum is taxable if it represents the redeemed earned equity on such investments as stocks, bonds or mutual funds.

Perhaps the purchase of gold as a hard asset might have made sense five to six years ago when its value was easily a third of what it has become today. Yet, future gold values predicted to increase to $1,000 could cause some to buy the high risk-low return (possible ten percent increase) asset.

A small scale seller will always have a hard time getting a good price on the sale of gold, however. Your purchase price will also be higher than the market prices with added handling, forging and service fees.

As a tangible asset, gold does not perform well when compared to liquid cash or currency, but may be useful in some nations as collateral on local loans.

Avoid the temptation to smuggle undeclared income or currency in excess of $10,000 through international customs as it is completely illegal. The same could be said for carrying travellers' checks in excess of $10,000 dollars or trying to mail gold bullion home.

Usually couriers will not insure gold products, and if lost and undeclared, this remains high risk, and again, is completely illegal.

Avoiding exchange risk fluctuations can be extremely difficult but many local banks offer foreign currency accounts which might be a better overall risk for lump sum savings held in country.

At the same time, currency fluctuations can also at times work in your favor. So a dual split, 50 percent of saved income in a local foreign currency account and a 50 percent monthly remittance at current exchange rates might make the most sense in minimizing currency exchange risks and still making large lump sum transfers.


To contact Daniel, visit his website at crossculturalreviews.blogspot.com -- Ed.




2008.02.11