[Inside Chodong] The Paradox of Regulations on Fraudulent Bank Accounts

'Restricted-Limit Accounts' Introduced to Prevent Voice Phishing
Uniform Regulations Without Distinction Between Consumers
Genuine Customers Treated as 'Potential Criminals'
Operational Convenience Traps Banks in the Age of AI
Banks Ar

I received a call from an acquaintance who works in the financial investment industry. He lamented that a savings account he had opened at Bank A had reached maturity, but because the account was classified as a restricted-limit account, he was unable to withdraw the lump sum in one go. He had meticulously prepared a certificate of employment and a certificate of earned income withholding tax and visited the bank branch to have the account limit lifted, but was only told, "Premature termination of a savings account is not a valid reason for lifting the restriction." It made no difference that he had been a long-term customer for over ten years. The only practical solution the bank offered was to close his payroll account at another bank and move his main transaction account to Bank A. Leaving the bank empty-handed, he decided never to do business with Bank A again.

Of course, the restricted-limit account system itself cannot be entirely denied. As voice phishing and financial fraud schemes become increasingly sophisticated, a minimum level of security is essential. Considering that losses from voice phishing surpassed 1 trillion won last year, it is understandable that financial authorities and banks strictly manage the opening and transfers of accounts.

The restricted-limit account system was introduced in 2016 for users who have difficulty submitting objective documentation required to confirm the purpose of a financial transaction. The background lies in the 'Financial Transaction Purpose Verification System' implemented in 2012, which was established to eradicate "borrowed-name" accounts by requiring verification of transaction purposes when opening deposit and withdrawal accounts. The system set transfer limits on new accounts or accounts with insufficient transaction history to prevent criminal organizations from siphoning off large sums of money at once.

The problem does not lie with the system itself. The current practice of applying virtually identical standards to all customers—without sufficiently distinguishing risk levels or transaction histories—has come under scrutiny. In the field, there is ongoing discontent that even consumers with a history of normal financial activity are being subjected to excessive restrictions.

Criteria for lifting account limits also vary from bank to bank. Some banks require payroll transfer records, while others require automatic payment of utility bills or credit card usage records. In some cases, a certain period of transaction history is required. These are procedures to verify that the actual account holder is using the account legitimately.

However, among some consumers, there is criticism that the conditions for lifting account limits are being used as a marketing tool to attract new customers. This is because banks demand the opening of a payroll account or the purchase of financial products as conditions for lifting the restriction. When a consumer protection system becomes entangled with a bank's sales logic, consumer trust inevitably begins to erode.

It is not impossible to understand the position of the banks. When a financial incident occurs, blame is harshly assigned, so banks have no choice but to respond conservatively. Concerns that a loosening of regulations could be exploited by criminal organizations are also valid.

However, treating all consumers as potential criminals cannot be a sustainable solution. It is necessary to reconsider whether it is reasonable to apply the same standards to both new accounts or accounts with suspicious transaction patterns and to long-term customers with years of stable transaction history. Banks have already accumulated ample data on customers' income flows, consumption patterns, and transaction histories. In an era where digital technologies such as artificial intelligence (AI) are highly advanced, continuing to rely solely on uniform regulations is out of step with the times.

Preventing financial crime is, of course, important. However, the financial sector needs to reflect on whether the current system is truly protecting consumers or simply wearing them down. This is the era of "money move," where funds are rapidly shifting to stock markets and investment platforms. Even in a situation where every customer counts, it is worth asking whether banks are driving customers away by clinging to operational convenience and uniform standards.

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