Investigation into LH Scandal: Hidden Accounts Over 10 Million Won

Joined Financial Supervisory Service Joint Investigation Team
Support from Financial Intelligence Unit

[Image source=Yonhap News]

[Asia Economy Reporters Kiho Sung and Gwanju Lee] Financial authorities are launching an investigation into the use of nominee accounts related to allegations of land speculation by employees of the Korea Land and Housing Corporation (LH) in the 3rd New Town development project. The Financial Intelligence Unit (FIU) under the Financial Services Commission, which has the authority to track accounts, is expected to scrutinize illegal inflows and outflows of funds and money laundering suspicions involving amounts exceeding 10 million KRW.

On the 15th, an FIU official stated, “The Financial Services Commission and the Financial Supervisory Service will dispatch personnel to the government joint special investigation headquarters to examine whether the loans taken by LH employees were lawful,” adding, “If judicial authorities such as the prosecution or police request clarification regarding the connection to alleged offenses during the loan process, we will cooperate with investigations such as nominee account inquiries in accordance with the law.”

Earlier, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki ordered a thorough investigation by financial supervisory authorities into the loan process. Accordingly, financial authorities decided to investigate whether there were any illegal loans involving LH employees. If requested by judicial authorities through the FIU, account tracking related to illegal or nominee transactions involving LH employees and their families will also be conducted.

The FIU analyzes illegal fund inflows and outflows or money laundering suspicions for financial transactions exceeding 10 million KRW not only for public officials but for all citizens, providing related information to the National Tax Service and the prosecution. Initially, financial institutions reported cash transactions exceeding 20 million KRW to the FIU, but this threshold was lowered to 10 million KRW starting in 2019 due to legal amendments.

An FIU official explained, “Because this is a matter of great public interest, we will actively cooperate if a request is made. However, requests for clarification must be related to criminal investigations or tax audits.”

Meanwhile, the Special Investigation Unit for Real Estate Speculation Crimes of the Gyeonggi Southern Provincial Police Agency conducted a search and seizure operation at five locations, including the homes and offices of A, a member of the Siheung City Council affiliated with the Democratic Party, and B, a public official at Gwangmyeong City Hall, starting at 10 a.m. on the same day with 24 investigators. Previously, the Association of Judicial Exam Preparatory Students (Sajunmo) filed a complaint with the police alleging that A and her mother purchased land in Garim-dong, Siheung City, Gyeonggi Province, a planned development area for the 3rd New Town, and constructed commercial buildings to gain speculative profits. B, who was also reported, was found to have purchased 793 square meters of forest land in Gahak-dong, Gwangmyeong City, Gyeonggi Province, in early July last year for 430 million KRW under joint ownership with himself and three family members, causing controversy.

This content was produced with the assistance of AI translation services.