'Damage relief must be provided': Yoon condemns illegal private loans

President Yoon Suk Yeol pledges to crack down on illegal private lenders in a meeting at the the Financial Supervisory Service (FSS) in Yeouido, western Seoul, on Thursday. [JOINT PRESS CORPS]

President Yoon Suk Yeol said that illegal private lenders must be punished at all costs, calling for an end to illegal profiteering as he visited the Financial Supervisory Service (FSS) Thursday.

"Severely punish malicious criminals who suck the blood of the weak so that they regret their crimes for the rest of their lives, and, if necessary, push for a revision of the law and higher sentencing standards," Yoon said at a meeting held at the FSS's call center for victims of illegal financial activities.

This was the first such visit by a sitting president to the FSS in 12 years, the last being made by former President Lee Myung-bak in May 2011. It comes as Yoon pledged to eradicate illegal private lending, sharing concerns that low-income, low-credit financially vulnerable groups were suffering irreparable damages.

The meeting was attended by around 20 people, including victims of illegal private loans, counselors and National Police Agency investigators who were able to share the experiences.

Yoon shared that he had been "sad and heartbroken" when he heard about the case of a mother and two daughters who took their lives because they were debt-ridden and couldn't withstand the demands from illegal loan sharks.

He said "extortion and illegal debt collection are truly vicious crimes."

Yoon further warned that "young people with no social experience are also becoming victims," noting that illegal private lending has recently become rampant online.

"It is the basic responsibility of the state to protect the common people and the vulnerable from crimes that prey on people's livelihood," Yoon said. "It must be eradicated, and actual damage relief must be provided."

He pointed to a case of a woman in her 30s who ran a clothing store and had borrowed 1 million won ($750) using an acquaintance's contact information as collateral but was sexually exploited when she couldn't pay back a killer 5,200-percent annual interest rate.

"These crimes are a vicious cancer that tramples on individual lives, eradicates human rights and destroys families and societies," Yoon said. "If we ignore them and do not completely eradicate them, it is difficult to call our society a liberal democratic society."

He said that "all criminal profits of illegal private loan sharks, including borrowed-name assets, should be tracked and recovered."

Yoon further called on the National Tax Service to take measures to "ensure that not a single penny of the profits gained through illegal private loans can be concealed, through conducting a broad and strong tax investigation."

Yoon instructed aides to come up with a "multi-faceted" plan to ensure that victims receive compensation for their mental and physical pain, including a way to use the recovered crime proceeds to provide relief to the victims.

The meeting at the FSS was also attended by related agency heads including Justice Minister Han Dong-hoon, National Police Agency Commissioner General Yoon Hee-keun, FSS Gov. Lee Bok-hyun and People Power Party (PPP) Chairman Kim Gi-hyeon.

The visit comes as the maximum legal lending rate was lowered from 24 percent to 20 percent in 2021 as an attempt to provide relief to low-income households, but in turn, private lenders, the last source of emergency funds for the common people, have been suspending or decreasing new loans.

The number of cases of illegal private finance damage reported and consulted by the FSS call center in the first half of this year was 6,784, according to data submitted by the FSS to the office of PPP Rep. Suh Bum-soo. This is the highest amount recorded for the same period, up from 5,037 cases in the first half of 2022.

Total cases have also been on a rise annually over the past five years, with 5,468 cases in 2019, 8,043 cases in 2020, 9,918 cases in 2021 and 10,913 cases last year.

BY SARAH KIM [kim.sarah@joongang.co.kr]