Comprehensive Investigation into Murderous High Interest Rates and 'Threatening' Illegal Loan Sharks
Second Investigation Focuses on New Methods like Mobile Phone Pawn
"Will Prepare Institutional Improvement Measures for the Entire Private Loan Sector"
The National Tax Service (NTS) has initiated a rigorous second round of investigations through information cooperation with the prosecution, police, and Financial Supervisory Service, following the first illegal private loan investigation that recovered 43.1 billion KRW from illegal debt collectors and brokers.
The NTS announced on the 20th that it has commenced a simultaneous nationwide second investigation covering a total of 179 cases, following the first investigation of 163 cases as a follow-up measure to the 'Illegal Private Loan Livelihood Field Meeting' held last November under the president's chairmanship.
After the illegal private loan livelihood field meeting last year, the NTS participated in the 'Government-wide Illegal Private Loan Eradication Task Force (TF).' It also established its own TF led by the deputy commissioner to conduct a simultaneous nationwide investigation of 163 illegal private loan cases. Through tax audits, it recovered 40.1 billion KRW targeting private lenders (29.4 billion KRW), intermediaries (4 billion KRW), and debt collectors (6.7 billion KRW), while conducting penalty investigations on 10 cases.
Additionally, individuals who received real estate as collateral in their children's names as debt repayment or who enjoyed a luxurious lifestyle through illicit income disguised as gifts were identified and 1.9 billion KRW was recovered. Furthermore, through residence inquiries and tracking of those who deliberately defaulted after large tax recoveries from illegal lending tax audits, 1.1 billion KRW was collected.
The second tax audit targets include brokers and illegal private lenders using new methods such as mobile phone cashing identified in the first investigation (financial tracking and tips). The total 179 cases comprise 119 tax audits, 34 source of funds investigations, and 26 delinquent property tracking investigations. However, to prevent harm to low-income and small business borrowers with urgent financial needs, legitimate lending companies such as 'Excellent Private Lenders for the Underprivileged' were excluded from the investigation.
The second investigation will be conducted by strengthening cooperation with the prosecution, police, and Financial Supervisory Service. The NTS analyzed and selected over 60% (more than double the 30% in the first round) of the 119 second tax audits based on information from related agencies (74 cases). In addition, active collaboration will be pursued in legal support for search and seizure warrant requests, police accompaniment at the start of investigations, and prosecution of tax evasion offenders. The NTS plans to support the prosecution’s recovery of criminal proceeds and assist police investigations with financial tracking, thereby enhancing mutual cooperation.
An NTS official stated, "The NTS will not only recover evaded taxes through illegal private loan investigations but also strive to improve the overall environment of private lending." He added, "Related agencies participating in the Illegal Private Loan Eradication TF will mobilize all capabilities during the 'Special Illegal Private Loan Eradication Period (~June 2024)' to track every last won of evaded income by illegal private loan operators."
"Going forward, the NTS and related ministries will further strengthen mutual cooperation," he said, "and will continuously work to eradicate illegal private loans by actively discovering institutional improvement measures for private lending as a whole, not just through tax audits."
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