Conventional remote field eddy current tools, which are developed for electromagnetic detection of corrosion on metallic pipes, use transmitter and receiver coils that are spaced apart by at least twice the inspected pipe's diameter. This large space and the low operation frequency required for electromagnetic fields to penetrate multiple casings weaken the voltage induced at the receiver. This challenge limits the quality of corrosion detection and characterization. In this work, a three-axis fluxgate magnetometer is used as a receiver to increase the sensitivity and to enable extraction of directional location of defect from measurements taken off axis. The improved sensitivity and the azimuthal detection capability for localized defects are confirmed by simulations and demonstrated experimentally in a single (4-1/2 in.) pipe and double pipes (4-1/2 in. inside a 7 in.) test setups. The limitations of current electromagnetic technologies in characterizing local defects beyond tubing are highlighted and the benefits of the proposed system are discussed.