Seoul to combat borrowed-name accounts

The Korea Times

The Korea Times

National

Wed, November 29, 2023 | 04:09

Business

Seoul to combat borrowed-name accounts

Posted : 2010-10-28 16:30

Updated : 2010-10-28 16:30

Finance Minister Yoon Jeung-hyun promised a tougher clampdown on financial irregularities linked to “borrowed-name” bank accounts, which are at the center of a corruption scandal that has ripped through one of Korea’s largest banking groups.

Finance Minister
Yoon Jeung-hyun

By Kim Tong-hyung

Finance Minister Yoon Jeung-hyun promised a tougher clampdown on financial irregularities linked to “borrowed-name” bank accounts, which are at the center of a corruption scandal that has ripped through one of Korea’s largest banking groups.

In a broadcast news conference with television journalists Thursday, Yoon admitted to the urgency for closing the loopholes exposed in the country’s Real-Name Law, which was introduced in 1993 and made it illegal to hold bank accounts and property under fictitious names, to prevent corruption and tax evasion.

The recent revelations at the Shinhan Financial Group, where longtime Chairman Ra Eung-chan faces a disgraceful exit after being accused of opening bank accounts under the names of others to unlawfully move corporate wealth and bribe politicians, have been intensifying calls for better monitoring.

Yoon said that policymakers are currently discussing how to improve the system, although not deliberating on the possible adjustments that could be considered.

``The Real-Name Law requires financial service providers to check whether a certain bank account belongs to the person under the name it is issued to. What employees at financial firms don’t have is the investigative ability to confirm whether the money in the bank account belongs to that person or not,’’ Yoon said in the news conference at Seoul’s Lexington Hotel.

``It’s apparent that borrowed-name bank accounts have become tools for crime and illegal transactions. The government is taking a careful look at the problems related to how the real-name system is currently employed and how it can be improved, and the new measures will be announced at a preferable time.’’

Yoon said the new rules will provide sterner control on ``name-trust’’ bank accounts, in which a person agrees to open a bank account under his name to keep the money of another person. These have been the most common type of borrowed-name bank accounts because they are difficult to detect, while opening bank accounts under aliases or stolen personal data would be essentially impossible without collusion from a bank insider.

Yoon also revealed that his ministry increased its economic growth forecast for the country for this year to 6 percent, compared to the earlier projection of 5.8 percent, based on the predictions for healthy domestic demand and exports. The economy will also have a chance to exceed the 6 percent target if it can manage to grow in the fourth quarter, Yoon said.

Yoon also downplayed worries about possible asset prices bubbles and predicted the fluctuating housing market for both purchases and rent to stabilize ``soon.’’

The Financial Supervisory Service (FSS), which has been investigating suspicions that Shinhan’s Ra opened bank accounts under borrowed names and used the money for political lobbying, is set to make a decision on Ra’s penalty sometime during next month.

Lee Baek-soon, the CEO of Shinhan Bank, who appears to have managed the borrowed-name bank accounts, is also facing suspicions that he used 300 million won ($265,000) of the money to bribe a high-level political figure.

thkim@koreatimes.co.kr