In line with the continuous growth of e-commerce transactions, direct overseas purchases by Korean consumers have been steadily increasing.  In contrast to this trend, laws for the protection of Korean consumers and to manage and supervise purchasing agents in a systematic manner were inadequate.  On December 31, 2019, an amendment to the Customs Act created a new provision under which purchasing agents above a certain size are required to be registered and supervised by the applicable customs office (Article 222 (1) (7) of the Customs Act).  This provision went into effect on July 1, 2021.

To provide detailed guidelines and procedures necessary for the implementation of the provision, the Korea Customs Service (the “KCS”) published and enacted the Notification on the Registration and Management of Purchasing Agents (the “Notification”) on July 6, 2021.

Key provisions of the Notification are as follows.
 

• Subject of Registration and Requirements (Article 3 of the Notification)
  
  The purchasing agents subject to registration under the Customs Act are: (i) purchasing agents that are online retailers under the E-Commerce Act; and (ii) who also imported products as a purchasing agent during the preceding year with a the total value of KRW 1 billion or more.  Further, to be registered as a purchasing agent, the purchasing agent must fulfill certain other requirements, including not having any delinquent customs duties or taxes outstanding and, with certain exceptions, at least two years having passed since the cancellation of a bonded transportation provider registration.
  
  However, for anyone that has been engaged in activities as a purchasing agent since July 1, 2021 a grace period of one year applies and such purchasing agent will be deemed to have been registered as a purchasing agent until June 30, 2022. 

• Obligation of Registered Purchasing Agent (Article 7 of the Notification)
  
  A registered purchasing agent is prohibited from having another party perform the business of a purchasing agent using his/her name or business name or lend his/her registration certificate.  In addition, a registered purchasing agent bears the obligation to pay for the customs duties, penalties and certain other payments associated with the imported products by liaising with the consignee.  Further, a registered purchasing agent is prohibited from using consumers’ personal customs clearance codes for any purpose other than executing the specific acts it has contracted with the consumers to perform.

• Supervision by Applicable Customs Office and Administrative Penalties (Articles 8 and 9 of the Notification)
  
  The applicable customs office may conduct performance inspections of registered purchasing agents on an annual basis.  The result of such inspections must be reported to the Commissioner of the KCS.  In addition, the applicable customs office may, if necessary, require a registered purchasing agent to report on its business performance and other matters and submit documents such as its ledgers.
  
  If a registered purchasing agent (including its executives and employees) violates the Customs Act or the regulations thereunder in connection with its business, such registered purchasing agent may be subject to penalties, including revocation of its registration, business suspension for up to six months and/or other necessary measures depending on the particulars of the violation.

The KCS’s management and supervision of purchasing agents that carry out delegated overseas purchases are expected to intensify.  Companies that provide direct overseas purchasing services are advised to review potential customs issues in advance and check whether the appropriate internal procedures are in place to mitigate potential adverse consequences.