The finance ministry has launched efforts to overhaul the Foreign Exchange Transactions Act for the first time in 23 years.  

According to the ministry on Monday, the government is considering revising or establishing new regulations related to financial sanctions so they can apply independent sanctions as economic security has become an increasingly important factor as of late. 

Under the Foreign Exchange Transactions Act, dealings involving foreign exchange can be restricted only in certain cases, including to implement a treaty or international law that South Korea is party to or to contribute to international efforts to maintain world peace and security.

Under this law, South Korea can implement financial sanctions in line with global sanctions, including UN Security Council resolutions. However, there is little legal ground for South Korea to apply such sanctions based on its own objectives or assessments. 

Economic security has emerged as a key policy issue as globalization has been rattled by the U.S.-China conflict, supply chain instability related to the COVID-19 pandemic and Russia’s invasion of Ukraine.