38 Members of Organized Crime Group Including Gangsters Who Embezzled 1,000 Fraudulent Bank Accounts Arrested

Criminal Organization under Penal Code, Obstruction of Business, Violation of Electronic Financial Transactions Act Charges
Crime Proceeds 21.2 Billion KRW... 4.7 Billion KRW of Illegal Profits Recovered
Police: "Ghost Corporations Should Be Granted Authority to Request Dissolution Orders"

[Asia Economy Reporter Jang Sehee] The Seoul Metropolitan Police Agency's Violent Crime Investigation Unit announced on the 19th that they have arrested 38 individuals, including the ringleader who handed over more than 1,000 dummy bank accounts to criminal organizations, and have detained 6 of them.

The police arrested the ringleader of an organized crime group last July and subsequently detained them on charges of forming a criminal organization under the Criminal Act, obstruction of business, and violation of the Electronic Financial Transactions Act. After continuing the investigation, the case was transferred to the prosecution in October last year.

It was confirmed that the suspects opened 1,048 dummy bank accounts under the names of shell corporations over approximately three years from June 2019 to July last year, and distributed them to unidentified domestic and international criminal organizations. The organization was reportedly formed and operated by organized crime groups, charging a monthly rental fee of 1.7 million KRW per account.

The criminal proceeds obtained through the distribution of dummy bank accounts amounted to a total of 21.2 billion KRW. The illegal funds transacted were confirmed to reach 12.8 trillion KRW. These dummy accounts were mainly used for cyber gambling and voice phishing crimes.

The suspects divided roles such as ringleader, overall commander, account manager, corporation establishment manager, and account opener, reporting and directing activities in real-time through group chat rooms. They used aliases in the group chats to conceal their true identities.

They appointed homeless individuals, who were socially and economically vulnerable and had no fixed residence, as representatives of the corporations. They also showed thorough management by renting one-room apartments for the homeless and providing them with a certain amount of living expenses. They committed crimes by registering multiple branch operators under one corporate registration and opening several shell corporation accounts for each business operator.

Additionally, to secure lease contracts necessary for business registration, they split one property unit into two and created separate contracts.

The police also took measures to recover 4.7 billion KRW of illegal profits. They preemptively seized 4.6 billion KRW in account balances and 100 million KRW in cash before prosecution. Payment suspensions were requested for a total of 566 dummy bank accounts.

However, investigations into those who rented the dummy accounts were not conducted. The police explained that aside from evidence of money transactions, no other clues were found, making it difficult to include them in the investigation.

A police official stated, "Providing bank accounts to others and lending names for the establishment of shell corporations can be subject to criminal punishment," adding, "To eradicate dummy accounts of shell corporations, it is necessary to grant the police the authority to request dissolution orders for companies established for illegal purposes during the investigation stage."