Protection of Financial Consumers | Easy to Find, Practical Law

Real-name financial transactions

Principle of real-name (actual name) financial transactions

- Financial companies must conduct financial transactions in the real name (hereinafter “real name”) of the transaction party (Article 3(1) of the Act on Real Name Financial Transactions and Confidentiality).

※ “Financial companies” refer to institutions such as banks, community credit cooperatives, post offices, etc., as defined in Subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality and Article 2 of the Enforcement Decree of the Act on Real Name Financial Transactions and Confidentiality.

※ “Real name” refers to the name and resident registration number as recorded on the resident registration card [or for overseas Koreans, the name and passport number as recorded on the passport (for overseas Koreans without a passport, the name and registration number as recorded under the Registration of Overseas Korean Nationals Act)].

- Financial assets held in an account verified by real name or in an account verified by a similar method under foreign laws are presumed to be owned by the account holder (Article 3(5) of the Act on Real Name Financial Transactions and Confidentiality).

Exceptions to real-name verification

- Financial companies etc. may omit the verification of the real name in the following cases (Article 3(2) of the Act on Real Name Financial Transactions and Confidentiality; Article 4 of the Enforcement Decree of the Act on Real Name Financial Transactions and Confidentiality):

· Continuous transactions based on accounts with verified real names

· Collection of various public charges

· Transfer of KRW 1 million or less or its equivalent in foreign currency (including bank transfers without a bankbook) and purchase/sale of foreign currency equivalent to KRW 1 million or less

· Transactions involving the purchase of foreign currency, the import of deposits denominated in foreign currency, or the sale of bonds denominated in foreign currency that occur between the enforcement date of the Act on Real Name Financial Transactions and Confidentiality and December 31, 1998

· Transactions of specific bonds (hereinafter “specific bonds”) that are issued between the enforcement date of Act No. 5493, Act on Real Name Financial Transactions and Confidentiality (December 31, 1997) and December 31, 1998, with issuance conditions such as issuance period, interest rate, and maturity determined by the Minister of Finance and Economy.

√ Bonds denominated in foreign currency as per Article 13 of the Foreign Exchange Transactions Act

√ Bonds issued by securities finance companies under Article 329 of the Financial Investment Services and Capital Markets Act

√ Bonds issued by the Small and Medium Business Corporation under Article 65 of the Small And Medium Enterprises Promotion Act

√ Deposit Insurance Fund bonds under Article 26-2 of the Depositor Protection Act

√ Nonperforming Loan Management Fund bonds under Article 40 of the Act on the Efficient Disposal of Non-performing Assets, Etc. of Financial Companies and the Establishment of Korea Asset Management Corporation

Penalties for violation

- Executives or employees of financial companies who violate real-name financial transactions are subject to a fine of up to KRW 30 million (Article 7(1) of the Act on Real Name Financial Transactions and Confidentiality).

Prohibition of financial transactions in another person’s real name

Prohibition of financial transactions for illegal and evasive purposes

- No one may conduct financial transactions under someone else’s real name with the intent of concealing illegal assets, money laundering, fundraising for public threats, evading enforcement, or any other actions evading the law (Article 3(3) of the Act on Real Name Financial Transactions and Confidentiality).

- Violators may be sentenced to imprisonment for up to 5 years or fined up to KRW 50 million, and both imprisonment and fines can be imposed concurrently (Article 6 of the Act on Real Name Financial Transactions and Confidentiality).

Confidentiality of financial transactions

Prohibition on providing transaction information, etc.

- Those working in financial companies, etc., should not provide or leak information or data (hereinafter “transaction information, etc.”) about their financial transactions to others without written consent or request from the account holder (or, in a trust, the settlor or beneficiary). No one should demand transaction information, etc., from those working in financial companies, etc. (the main body of Article 4(1) of the Act on Real Name Financial Transactions and Confidentiality).

Penalties for violation

- Violators may be sentenced to imprisonment for up to 5 years or fined up to KRW 50 million, and both imprisonment and fines can be imposed concurrently (Article 6 of the Act on Real Name Financial Transactions and Confidentiality).

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