Exploiting the 75% Area Rule... Increasing Tricks from 4 x 50,000 Won to 250,000 Won

Increase in Abuse of Damaged Currency Exchange Criteria
Life Imprisonment or Over 2 Years Imprisonment Upon Detection

The Bank of Korea has announced a tough stance in response to increasing attempts to exploit the damaged banknote exchange criteria, which compensate the full amount if more than three-quarters of the note remains, by deliberately fragmenting currency for exchange.

Example image of damaged currency. [Photo by Bank of Korea]

On the 7th, the Bank of Korea held a meeting of the currency circulation system-related institutions council with 23 representative organizations including currency suppliers such as the Korea Minting and Security Printing Corporation, intermediaries such as commercial banks, and user representatives such as retail distribution companies to review necessary improvements in currency handling operations.

The Bank of Korea stated that recently there has been a rise in suspicious cases where counterfeit banknotes are created and then exchanged at commercial bank counters in relation to the damaged banknote exchange criteria. Damaged banknotes are exchanged in full if more than three-quarters of the original area remains, and half the amount if more than two-fifths remains.

Since the full amount is guaranteed if only 75% of the total currency area remains arithmetically, it is possible to turn four banknotes into five. For example, four 50,000-won notes can be fragmented and exchanged for 250,000 won.

Although such acts are illegal, it is difficult to detect cases of abuse. The Bank of Korea urged caution, stating, "If a person alters banknotes for personal use, they are subject to criminal punishment under Article 207 of the Criminal Act, which includes life imprisonment or imprisonment for more than two years."

Concerns about a 'Cashless Society'... "Rapid Transition Is Not Advisable"

Manual for Banknote Exchange According to Damage Level.
Photo by Bank of Korea

The currency circulation environment was also reviewed. The Bank of Korea explained that since COVID-19, the demand for high-denomination notes, which were issued in large quantities, has recently decreased, while demand for low-denomination notes used for commercial transactions has increased. Although the supply shortage of 10-won coins has been largely resolved, some supply and demand issues remain, requiring close cooperation among related institutions.

Concerns were also raised regarding the decline in cash usage amid the spread of non-cash payment methods. If the decrease in cash usage rapidly leads to a 'cashless society,' it could increase public inconvenience.

The trend of declining cash usage is a global phenomenon, but major countries including Sweden and the United Kingdom recognize that a rapid transition to a cashless society is undesirable. They have introduced or are promoting various policies to maintain public access to cash and ensure the choice to use cash.

This is based on the judgment that in cases of large-scale power outages caused by natural disasters or digital security issues that make non-cash payment methods difficult, there could be restrictions on the public’s economic activities.

Meeting participants evaluated that legislative institutionalization efforts among major countries’ policy responses should be considered as a reference when discussing countermeasures in South Korea in the future.

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