Financial Authorities Crack Down on Real Estate Speculation... Special Financial Response Team Activated (Comprehensive)

Dokyu-sang, Vice Chairman of the Financial Services Commission, "Suppressing Real Estate Speculation is One of the Most Important Goals of the Financial Sector"

[Asia Economy Reporter Park Sun-mi] On the 30th, the Financial Services Commission (FSC) launched a special financial response team against real estate speculation and decided to deploy all available personnel and resources in the financial sector. They expressed a firm determination to impose strict sanctions without exception if any violations are detected.

On the 30th, the FSC held the inaugural meeting of the Special Financial Response Team against Real Estate Speculation (hereafter ‘Financial Response Team’), chaired by Vice Chairman Do Gyu-sang. This meeting followed the government’s joint announcement by related ministries the previous day on the 'Measures to Eradicate Real Estate Speculation and Prevent Recurrence,' which was prompted by the Korea Land and Housing Corporation (LH) scandal, aiming to break the chain of real estate corruption.

At the meeting, it was discussed that the Financial Response Team, consisting of the FSC, Financial Intelligence Unit, Financial Supervisory Service, Korea Federation of Banks, and Credit Information Services, would be launched to support the measures to eradicate real estate speculation and prevent recurrence. The team will mobilize all available resources in the financial sector to respond to the issue. This effectively establishes a control tower for the financial sector’s response to real estate speculation.

The Financial Response Team will be led by the FSC Vice Chairman and composed of about 100 experts from four institutions. Specifically, it plans to conduct surveys on non-housing collateral loans, on-site inspections related to suspicious transactions, improvements to related systems, and serve as a hotline with the government’s joint special investigation headquarters (Joint Investigation Headquarters).

Focusing on land (farmland) collateral loans suspected of speculation, the team will check the overall appropriateness of the loan handling process, including ▲loan solicitation routes (registration and management of loan solicitors, appropriateness of commission payments), ▲loan screening (debt repayment ability, collateral evaluation, appropriateness of limits such as LTV), and ▲post-management (misuse of funds, measures to preserve claims).

In his opening remarks at the Financial Response Team launch meeting, Vice Chairman Do said, "The use of finance for real estate speculation must no longer occur. From today, curbing real estate speculation is one of the most important goals of the financial sector."

He continued, "The Financial Response Team will deploy all available personnel and resources in the financial sector to respond to real estate speculation with the highest level of vigilance," adding, "If any loans already handled are suspected of speculation, special on-site inspections will be conducted without delay, and any illegalities found will be immediately reported to investigative agencies. Furthermore, a system will be established to systematically conduct focused inspections on regions and financial companies where suspicious transactions rapidly increase, in cooperation with the soon-to-be-established Real Estate Transaction Analysis Institute."

He also stated that if any violations are detected during the land-related loan process, strict sanctions will be imposed without a single exception. Vice Chairman Do said, "Loans to speculators subject to farmland disposal obligations due to violations of the Farmland Act will be promptly recalled," and added, "To prevent loans that do not meet public expectations, regulations on non-housing collateral loans such as farmland will also be reviewed."

The FSC is currently conducting a detailed review of the entire loan process, including the loan-to-value ratio, and plans to include necessary improvements in the 'Household Debt Management Plan' scheduled for announcement in April. Vice Chairman Do said, "We will also expand and reorganize the illegal loan reporting center, led by the Financial Supervisory Service and the Korea Federation of Banks," and urged, "If you suspect illegal or unfair loans related to real estate speculation, please contact 1332. We will support self-cleaning efforts in the financial sector, such as reducing fines by up to 50% if financial institutions voluntarily report illegal loans."

Meanwhile, the FSC announced that since the 18th, it has been conducting on-site inspections of Buk Siheung Nonghyup, where loans to LH employees were confirmed. The principle is to promptly deploy inspection personnel and investigate any suspicious matters raised through reports of illegal loans or requests from the Joint Investigation Headquarters.

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