South Korea's ruling Uri Party is to push for new legislation that will strengthen exchange of financial information provisions with foreign regulators in a bid to crackdown on illegal business activities conducted by foreign investment funds operating in the country, the Korean Times reports.
"The demand for information exchange with foreign financial regulators has been growing as foreign shareholdings exceed 40 percent and a growing number of foreign financial institutions muscle into the local market," Rep. Moon Seok-ho of the Uri Party was quoted as observing in the report.
However, under current law, the Korean Financial Supervisory Service is restricted from forming partnerships with other national regulators because it can only reveal financial information in cases where a crime is alleged to have taken place.
"If the rule eased, we will be able to form partnerships with foreign counterparts. We will be able to set up measures against foreign funds' unfair practices based on the information provided by foreign regulators," an FSS official explained.
Information eligible for exchange with foreign regulators under new rules could include the ownership and governance structure of overseas firms, as well as their equity investment portfolios, sales performance figures and information on their core businesses.
The call for more comprehensive exchange of financial information rules comes after six foreign fund firms were earlier in October landed with back tax bills totalling US$200 million, the result of an investigation launched by the National Tax Service in April.
According to the NTS, the funds evaded taxes by nominally basing themselves offshore, paying high rates of interest to their overseas affiliates, using illegal expenses and failing to report securities transactions in accordance with the law.
The Uri Party has also said that it wants to revise laws so that the Korean Exchange can swap more information with other stock markets operators located around the globe.
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