Korea finds illegal foreign land transactions, with majority involving Chinese

[Photo by Lee Chung-woo]

The Ministry of Land, Infrastructure and Transport announced on Sunday that it has detected a total of 437 cases of illegal land transactions by foreigners from February to June from conducting an actual transaction investigation to crack down on illegal activities.

The investigation focused on 14,938 cases of land transactions by foreigners from 2017 to the end of last year. Out of these, 920 cases were selected and investigated due to suspicions of illegal activities, including contracts manipulating transaction values, registrations using borrowed names and engaging in law-dodging gifting practices.

By nationality, Chinese accounted for more than half of the foreigners found in violation. The government said it is actively cracking down on illegal transactions by foreigners in land transactions as well as housing transactions.

Various types of suspicious transactions by foreigners in real estate were identified by the government. There were 35 cases of illegal inflow of foreign funds. These cases involved foreigners transporting cash exceeding $20,000 from overseas without declaring it and using the cash to purchase domestic land.

There were six cases of suspected law-dodging gifting between special relationships, such as parents and corporations. There were also cases where corporations lent real estate transaction funds to corporate representatives without any borrowing acknowledgement.

The investigation also revealed that there were foreigners suspected of having engaged in illegal activities and obtained significant profits from price differentials.

Among the foreigners caught engaging in illegal activities, Chinese nationals accounted for 56.1 percent, or 211 cases, followed by Americans at 21 percent, or 79 cases, and Taiwanese at 8 percent, or 30 cases. In terms of regions, Gyeonggi Province had the highest number of suspicious acts with 177 cases, or 40.7 percent, followed by South Chungcheong Province with 61 cases or 14 percent and Jeju with 53 cases, or 12.2 percent.

The Ministry of Land, Infrastructure and Transport reported the cases to relevant agencies, such as the National Tax Service, the Korean National Police Agency, the Korea Customs Service and local governments depending on the type of suspicious activities, in order to initiate criminal investigations, impose fines and take other necessary actions.

In addition, for the majority of the 920 cases investigated, which involved agricultural land transactions, the Ministry of Agriculture, Food and Rural Affairs provided the data and is conducting on-site investigations regarding violations of agricultural land laws, such as violations of agricultural management obligations.

Prior to this investigation, which focused on land transactions, the government had conducted an investigation between June and September of last year to curb speculative foreign investments, primarily targeting housing.

In the latter half of this year, the government plans to launch a second investigation into suspected illegal transactions by foreigners, with a specific focus on foreign-owned homes and non-residential properties, including office buildings. “We will strictly manage illegal real estate transactions regardless of whether they involve domestic or foreign nationals,” said Minister Won Hee-ryong.