3787 Suspicious Transactions Detected Involving Corporate Funds Used to Purchase High-End Apartments in Gangnam

Apartment buildings in the Seoul area (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] Case 1. A man in his 20s, Mr. A, purchased an apartment located in Seoul owned by his father's acquaintance for 1.1 billion KRW, transferring ownership under the condition of assuming the seller's debt without payment. During this process, all conditions including debt assumption were agreed upon by the buyer's father, and since the buyer was judged to have no ability to repay the debt, the Ministry of Land, Infrastructure and Transport regarded this as a name trust and requested an investigation from the National Police Agency.

Case 2. Mr. B purchased an apartment in Gangnam, Seoul for 2.9 billion KRW, receiving about 700 million KRW from a corporation represented by his father. The Ministry of Land, Infrastructure and Transport reported this to the National Tax Service as corporate fund misuse and disguised gift.

The Ministry of Land, Infrastructure and Transport announced on the 2nd that from March 2020 to June last year, among 76,107 high-priced housing transactions nationwide over 900 million KRW, 7,780 cases classified as suspicious transactions were thoroughly investigated, resulting in the detection of 3,787 suspected illegal cases, which were reported to related agencies.

By type and number of cases reported to agencies, 2,670 cases were reported to the National Tax Service for disguised gifts and corporate fund misuse, 1,339 cases to local governments for false contract date reports and up/down contracts, and 58 cases to the Financial Services Commission for misuse of loans for purposes other than intended.

On February 21, 2021, the Ministry of Land, Infrastructure and Transport launched a dedicated real transaction investigation team with direct investigation authority over transaction report details, and together with the Korea Real Estate Board, continuously monitored transaction reports and conducted extensive field investigations.

The investigation results showed that suspicious illegal transactions were most frequently detected in ultra-high-priced housing concentrated areas such as Gangnam and Seocho districts in Seoul. Gangnam-gu recorded the highest number with 361 cases, followed by Seocho-gu with 313 cases and Seongdong-gu with 222 cases. Bundang in Gyeonggi Province (209 cases) and Songpa-gu (205 cases) also ranked high.

These areas also had the highest ratio of suspicious illegal transactions compared to total housing transactions. Gangnam-gu had the highest at 5%, followed by Seongdong-gu (4.5%), Seocho-gu (4.2%), and Gwacheon in Gyeonggi Province (3.7%).

Suspicious illegal cases mainly involved disguised gifts, corporate fund misuse, false contract date reports, and up/down contracts.

For example, one buyer procured 1.6 billion KRW out of the 4.1 billion KRW purchase price using corporate funds from a corporation he represents. The Ministry of Land, Infrastructure and Transport reported this transaction to the National Tax Service suspecting corporate fund misuse. If tax evasion is found during the tax investigation, the evaded tax amount will be collected.

Kim Soo-sang, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, stated, “We will actively detect market-disturbing acts by some speculative forces that undermine the transaction order of the real estate market and establish a market order centered on actual demand.”

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