Supreme Court Sets First-Ever Standard
[Supreme Court Ruling]
The Supreme Court has ruled that when a corporate CEO uses a company account for the purpose of committing crimes or circumventing the law, this constitutes conducting financial transactions under another person's real name by using the corporate name as a means for their own financial dealings. This is the first time the Supreme Court has set a standard regarding whether a CEO's use of a corporate account, in the name of a corporation they represent, constitutes a violation of the Real Name Financial Transactions Act.
The Supreme Court's Criminal Division 2 (Presiding Justice Kwon Youngjun) on June 5 overturned the lower court's acquittal of Mr. A and others on charges of violating the Real Name Financial Transactions Act, and remanded the case to the Changwon District Court (Case No. 2025Do676). The defendants had been indicted for violations of the Act on Regulation and Punishment of Concealment of Criminal Proceeds and the Real Name Financial Transactions and Confidentiality Act.
[Facts of the Case]
Mr. A and others conspired to provide fake corporate accounts, established under the guise of gift card trading businesses, to online gambling and investment fraud criminal organizations. They withdrew criminal proceeds remitted to these accounts in cash and delivered the funds to members of the criminal organizations in exchange for commissions.
From April to May 2023, Mr. A, Mr. B, and Mr. C received a total of KRW 1,280,000,000 from 17 victims through 152 separate transactions, transferred the funds to corporate accounts established in the name of fake gift card trading businesses, withdrew the cash, and delivered it to criminal organization members. In March 2023, Mr. A, Mr. B, and Mr. E used the same method to withdraw KRW 15,000,000 sent by a victim and delivered it in the same manner. Similarly, in July 2023, Mr. A, Mr. B, and Mr. D withdrew a total of KRW 90,000,000 and delivered it to organization members using similar methods.
The prosecution indicted Mr. A and others on charges of conspiring with unidentified organization members to conduct financial transactions under another person's real name for the purpose of concealing illegal assets, money laundering, or circumventing the law.
[Lower Court Rulings]
The court of first instance found Mr. A and others guilty of violating the Real Name Financial Transactions Act and the Act on Concealment of Criminal Proceeds, but acquitted them of fraud charges.
However, the appellate court ruled that "it is difficult to consider this as conducting financial transactions under 'another person's' real name for the purpose of circumventing the law," and acquitted them of violating the Real Name Financial Transactions Act. The court reasoned that, at the time the corporate accounts were used, the defendants were the CEOs of the respective corporations, and since a corporation can conduct financial transactions in its own name only through its officers, the act of a CEO using a corporate account in the name of the corporation they represent is equivalent to the corporation itself using its own account through its CEO.
[Supreme Court Ruling]
The Supreme Court reached a different conclusion. The Court stated, "If a person in the position of a corporate representative formally conducts financial transactions in the name of the corporation but, in substance, uses the corporate name as a means to conduct their own financial transactions for the purpose of committing crimes, such transactions fall under 'financial transactions under another person's real name' as defined by the relevant penal provisions." The Court further explained, "In determining whether a transaction falls under this category, one must comprehensively consider whether the corporation was established for criminal purposes and whether the corporate account was opened and used for such purposes, as well as the circumstances and purpose of the corporation's establishment, the opening and usage of the account, the actual operation and management of the corporation, the source and use of the funds involved in the transactions, the relationship between the corporation's activities and the individual's crimes, the extent to which the corporation is a mere shell, and the actual beneficiary of the financial transactions."
The Court continued, "The defendants established each corporation for the purpose of money laundering criminal proceeds, opened corporate accounts, and conducted numerous financial transactions for money laundering. The profits from these transactions, namely the commissions earned from laundering criminal proceeds, were not attributed to the corporations but clearly to the defendants themselves."
Therefore, the Court concluded, "Since the defendants, from the outset, used the corporate names as a means to conduct their own financial transactions for the purpose of money laundering criminal proceeds, all such transactions constitute 'financial transactions under another person's real name' as stipulated in the relevant penal provisions."
Hong Yoonji, Legal Times Reporter
※This article is based on content supplied by Law Times.
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