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Untitled Document
THE LAW OF THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA ON FOREIGN EXCHANGE CONTROL

Adopted by Resolution No.27 of the Standing Committee of the Supreme People’s Assembly on January 31, 1993,
amended by Decree No. 484 of the Presidium of the Supreme People’s Assembly on February 26, 1999, and
amended by Decree No. 2852 of the Presidium of the Supreme People’s Assembly on February 21, 2002

Chapter 1. Fundamentals

Article 1. The Law of the Democratic People’s Republic of Korea on Foreign Exchange Control is intended to contribute to holding foreign exchange in a unified way and using it rationally by establishing a strict system and order in earning, using, bringing in and taking out foreign currency.
Article 2. Foreign exchange includes convertible foreign currencies and such foreign currency securities as State bonds and debentures.
Instruments of foreign exchange payments such as drafts, cheques and negotiable certificates of deposit, gold, silver and platinum other than decorative articles, gold and silver coins traded on international financial markets, and other precious metals belong to foreign exchange.
Article 3. Controlling foreign exchange in a unified way is an important principle in foreign exchange control.
The State shall ensure that the central financial guidance organ holds and controls foreign exchange in a unified way.
Article 4. Foreign exchange transactions in the DPRK shall be undertaken by the Foreign Trade Bank.
Other banks may engage in foreign exchange transactions with the approval of the central financial guidance organ.
Article 5. A foreign currency in cash shall not be circulated in the territory of the DPRK.
A foreign currency shall be converted into Korean won if it is to be used.
Article 6. Buying, selling, saving, depositing and mortgaging of foreign currency shall be done only through a bank authorized to conduct foreign exchange transactions.
A bank authorized to conduct foreign exchange transactions shall undertake its business within the scope approved by the central financial guidance organ.
Article 7. The kinds of exchange rate of Korean won in foreign currency, the scope of their application and fixed exchange rate shall be determined by the central financial guidance organ.
The rates of foreign currency in cash and settlement exchange when exchanged into Korean won shall be determined by the Foreign Trade Bank.
Article 8. External settlement shall be made in foreign currencies specified by the central financial guidance organ.
Where agreements have been reached concerning external settlement between the governments of the DPRK and the other countries, the agreements shall take effect.
Article 9. The State shall protect by law foreign currencies earned legally and ensure their inheritance by citizens.
Article 10. This law shall be applied to the organs, enterprises, associations and citizens that earn or use foreign exchange.
The law shall also be applicable to the representative missions of other countries and international organizations, foreign-invested enterprises, foreign individuals and overseas Korean compatriots that earn or use foreign exchange in the territory of the DPRK.
The order of foreign exchange control to be applied in the special economic zone shall be established separately.

Chapter 2. Earning and Use of Foreign Currency

Article 11. The central financial guidance organ shall specify the rate of obligatory payment of foreign currency to the State by the relevant organs, enterprises and associations according to the earning and expenditure plan of foreign currency formulated by the State planning organ.
The organs, enterprises and associations shall keep their accounts at the Foreign Trade Bank and deposit their foreign exchange earnings in time.
Article 12. The representative missions of foreign countries and international organizations shall keep their accounts at the Foreign Trade Bank and deposit foreign exchange in the bank.
Article 13. The foreign-invested enterprises shall keep their accounts at the Foreign Trade Bank and deposit their foreign currency earnings in the bank.
Where they wish to open their accounts at other banks or at the banks outside the territory of the DPRK, they shall consult with the central financial guidance organ.
Article 14. The organs, enterprises and associations shall fulfil in time their plans for earning foreign currency and deliver to the State the obligatory foreign currency on a priority basis.
Article 15. A citizen of the DPRK shall hold foreign currency earned legally within the limit defined by the central financial guidance organ.
In case of excess, he shall either deposit it in or sell it to the bank that engages in foreign exchange transactions..
Article 16. A foreign individual may deposit foreign currency remitted from abroad or legally earned in the bank that engages in foreign exchange transactions or sell it to that bank.
Article 17. Foreign currency may be used in the following transactions:
1. Payment in accordance with external economic contracts and payment agreements,
2. Payment in such non-trade transactions as payment of travel expenses, overheads and maintenance costs,
3. Buying or selling of Korean won at a bank, and
4. Such transactions as depositing, trusting, loaning and guaranteeing debt.
Article 18. External settlement shall be made in the form of letter of credit, remittance, payment claim or payment order.
Article 19. The organs, enterprises and associations shall use foreign currency for the items and purposes specified.
In case they want to use foreign currency for the items and purposes other than specified, they shall obtain approval of the central financial guidance organ.
Article 20. The organs, enterprises and associations shall be allowed to use on its own the amount of their surplus earning of their foreign currency earning plans. In this case, they shall use it for the specified items and purposes.
Article 21. The bank in charge of foreign currency settlements shall guarantee the secrecy concerning deposits and savings of foreign currency and pay calculated interests as specified.
The bank shall discharge foreign currency wanted by depositors and savers in good time.
Article 22. The bank in charge of foreign currency settlements of the DPRK shall be allowed to lend foreign currency to the organs, enterprises, associations and foreign-invested enterprises. In this case, it shall formulate a plan of lending foreign currency, consult with the central financial guidance organ and have it ratified by the Cabinet.
Article 23. The organs, enterprises and associations may draw a loan from another country or an international organization. In this case, they consult with the central financial guidance organ and have it ratified by the Cabinet.
Article 24. The organs, enterprises and associations wishing to issue securities denominated in foreign currency shall obtain approval of relevant organs.

Chapter 3. Bringing In and Taking Out of Foreign Currency

Article 25. Foreign currency in cash, securities denominated in foreign currency and precious metals may be brought into the territory of the DPRK without limit. In this case, commission or tariff shall not be applied.
Article 26. Foreign currency in cash shall be allowed to be taken out of the territory of the DPRK within the limit as specified in the foreign currency exchange document issued by a bank or as declared to the customs upon entry.
Article 27. Securities in foreign currency may be removed from the territory of the DPRK only with the approval of the central financial guidance organ.
Securities in foreign currency declared to the customs upon entry may be taken out of the territory of the DPRK without permission being sought.
Article 28. Precious metals may be taken out of the territory of the DPRK with approval of the Central Bank.
Precious metals brought into the territory of the DPRK shall be allowed to be taken out within the limit declared to the customs upon entry.
Article 29. A foreign investor shall be allowed to remit out of the territory of the DPRK profits and other earnings from business without being taxed.
Invested assets may be taken out of the territory of the DPRK without being taxed.
Article 30. A foreign individual working in a foreign-invested enterprise may remit or take out of the territory of the DPRK foreign currency running up to 60 per cent of his total salaries and other legitimate foreign currency earnings.

Chapter 4. Guidance and Supervision over Foreign Exchange Control

Article 31. The central financial guidance organ shall guide and supervise foreign exchange control under the unified guidance of the Cabinet.
The central financial guidance organ shall establish a correct system of guidance over foreign exchange control and balance the earning and expenditure of foreign currency.
Article 32. The organs, enterprises and associations under the central budget shall be guided directly by the central financial guidance organ.
The organs, enterprises and associations under the local budget shall be guided through the provincial people’s committee.
Article 33. The central financial guidance organ shall exercise unified supervision and management of the foreign exchange claims and liabilities to foreign countries.
The organs, enterprises and associations concerned shall satisfy the demands of the central financial guidance organ in time.
Article 34. The central financial guidance organ shall define the standards of expenditure of foreign currency as living allowances and travel expenses, and ensure their proper implementation.
Article 35. The central financial guidance organ shall receive from the bank that engages in foreign exchange transactions quarterly and yearly financial statements and other necessary statistical data concerning its business.
Article 36. The organs, enterprises and associations shall review the implementation of their foreign exchange plans on a monthly and quarterly basis and submit them to the central financial guidance organ.
The central financial guidance organ shall review them and report it to the Cabinet.
Article 37. The central financial guidance organ may inspect foreign exchange management by the organs, enterprises, associations and the bank that engages in foreign exchange transactions.
The relevant organs, enterprises, associations and the bank that engages in foreign exchange transactions shall provide conditions necessary for inspection by the central financial guidance organ.
Article 38. In case of failure to pay an exact amount of foreign currency obligatory to the State in time, arrearage charge shall be imposed.
Article 39. In case of inflicting losses on depositors and savers for failure to disburse foreign currency in time, relevant damages shall be compensated.
Article 40. In case foreign currency has not been deposited with a bank within the set date or it has been deposited with another bank, fines shall be imposed.
Article 41. Foreign currency and other materials transacted illegally or diverted to foreign countries shall be confiscated.
Article 42. The officials of the organs, enterprises and associations and individual citizens that have violated this law and so caused grave consequences in foreign exchange control shall be subject to administrative or criminal penalties, corresponding to the severity of the violation whatsoever.


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