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Bigger penalties for fake-name bank accounts

Mar 06,2018
The financial authority announced it will reform the Real Name Financial Transaction Act so that bank accounts opened under false names after the act took effect in 1993 can be fined.

Additionally, the Financial Services Commission is looking into raising the fine from 50 percent of the assets found in the accounts.

The current law only levies fines on such accounts that were opened prior to the Aug. 12, 1993, enactment of the law.

The FSC said Monday that tax evasion committed by rich people using bank accounts under false names is becoming a major social issue. Its goal is to reform the legislation to end the temptation to use such accounts for criminal purposes, including money laundering and creating slush funds.

Samsung Group Chairman Lee Kun-hee was found to control a large number of bank accounts opened under other people’s names since 1993.

The Financial Supervisory Service on Monday announced that Lee had 6.18 billion won ($5.68 million) stashed away in 27 accounts under false names when the Real Name Financial Transaction Act went into effect in 1993.

Some 13 of those accounts were at Shinhan Bank with 2.64 billion won in deposits; seven were at Korea Investment & Securities with 2.2 billion won in deposits; three were at Mirae Asset Daewoo with 700 million won in deposits; and four were Samsung Securities valued at 640 million won.

In a 2008 investigation by the government, Lee was found to control 1,229 bank accounts under false names. However, 1,202 were created after the 1993 law went into effect.

“Although the concept that financial transactions have to be made under genuine names has generally been established since 1993, there are still people who create accounts under false names for tax evasion purposes,” said FSC Vice Chairman Kim Yong-beom.

He said revised legislation in 2014 dictated that people found guilty of using such accounts for tax evasion faced a maximum of five years in prison. But until now there was no way to force them to put their own name on the accounts. Some people found guilty of that form of tax evasion did jail time and maintained their wealth. But by fining those bank accounts, people may decide to put their own names on them.

The FSC, however, noted that fines will not be applied to false name bank accounts whose purpose are not tax evasion or criminal activity.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]


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