Korean Banks Cite Non-existent Law on Expat Cards

by Kim Soe-jung Staff Reporter Joongang Daily Newspaper , 28/01/2008

The difficulties foreigners living in Korea have obtaining international debit cards and local credit cards are a perpetual source of frustration for expatriates.

While some banks even tell customers that “new” Ministry of Finance regulations prevent them from issuing international debit cards to foreigners, there are no such rules, according to a ministry official. Lee Cha-woong, an official at the ministry’s foreign currency department said, “There was no change of governmental laws or regulations on the issuance of an international debit card to foreigners.”
According to Lee, each local bank has different policies on issuing cards.

Some banks issue the debit card without any restriction on foreigners while others limit the amount of money a foreigner can withdraw with the card to 10,000 dollars on a given trip out of the country. Many banks simply won’t issue any debit card to foreigners. The system can bewilder and enrage foreigners.

Sei Chong, a Korean-American living in Seoul, was unpleasantly surprised during a visit to the United States last September to find that she could no longer withdraw money from her Korean bank. “I travel a lot overseas. I even withdrew money when I was in Afghanistan in March. But after I switched my old, tattered ATM card with a new one in September, I could not withdraw money at any bank in the States,” said Chong, who is an editor at a news agency. Kookmin Bank told Chong she could not withdraw money outside the country with an ATM card because she is a foreigner. A Citibank officer said an international bank cannot give a foreigner an international debit card because it has to abide by local laws.
Then Chong visited SC First Bank and got the card she needed without a problem. “No one seems to know where this law came from,” said Chong. “I think it makes Korea a backward country.” The answer is simple. There is no such law.

The inconsistencies of local bank rules have long been a source of irritation for foreigners living in Korea, especially as the country now aspires to be an international financial hub. On expat-oriented Web sites discussion threads are filled with complaints about Korean bank services and double-standards in treatment by banks. At last year’s Seoul Town Meeting, where foreigners air gripes about living here, the alleged rule change was a hot topic, but no clear information was given by officials.

The latest discussion of a “rule” seems to have come from a misunderstanding. The Korea Federation of Banks asked the Finance Ministry’s Lee for guidance on the debit card issue early last year, Lee said.
He explained the situation. According to Lee, there are two types of bank accounts foreigners can have here: domestic transaction accounts and foreign transaction accounts. If a foreigner opens the latter, he or she can withdraw money outside the country without any restrictions. But the source of deposits should be reported both to the bank and financial authorities.

“I never said the banks should not issue international ATM cards. I just told them that the amount that can be withdrawn from a local domestic transaction account should be limited to $10,000 per exit from the country, under the laws on foreign currency transactions,” said Lee. The limit on domestic accounts was set to prevent foreigners from withdrawing large sums from a local account to avoid taxes. “Some banks, which had issued the international debit card before, might have stopped because it would cost extra for them to establish a separate system to limit the amount foreigners can withdraw,” said Lee.

Yoo Jeong-yoon, a public relations officer at Kookmin Bank, said, “If foreigners withdraw money with their ATM card overseas, we cannot control the limit. So our bank does not issue the card to foreigners.”
But there is almost no consistency, even within the same bank. A branch of Korea Exchange Bank in southern Seoul said that it does not issue the overseas card to foreigners. A branch of Shinhan Bank near City Hall said a foreigner has to wait for three months after opening an account to receive the card. But a Shinhan branch in Wonju, Gangwon said it can issue the card immediately. A Woori Bank branch near City Hall said it issues the card to foreigners as soon as they open an account.

“The ministry gave us vague answers, saying each bank should set its own policy,” said Hong Gang-ho, an official at the federation of banks.

Such random policies also apply to credit cards. “I could not get a credit card from a bank where I had an account for years. Then, when I went with my Korean coworker and asked them bluntly why I should keep my account with them if I could not get a credit card, they issued one,” said a German man, who teaches at a private high school in Gangwon.

Bank also have a variety of different requirements that foreigners must meet to receive a credit card. Some demand a Korean cosigner, others insist on proof of employment with a company here for more than six months. Still others require a yearly income of more than 50 million won ($52,820). The rules don’t exist for Koreans.

Park Yeon-soo contributed to this article.
By Kim Soe-jung Staff Reporter [soejung@joongang.co.kr]
Article appeared in the 28 January 2008 edition of the Joongang Daily

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