Lack of legal basis prevents Korean banks from suspending fraud-related accounts

[Image source: Pixabay]

South Korea has experienced a surge in online scams, often involving secondhand deals and investment fraud. According to a recent revelation, however, most of the country’s commercial banks have failed to accept requests for suspension of payment from accounts exploited for these frauds due to the lack of legal evidence for their compliance with the suspension.

Based on the data from the Financial Supervisory Service (FSS), Lee Yong-woo, a member of the National Assembly, said on Tuesday that among the top five lenders, only Hana Bank was found to have suspended accounts that are suspected of being exploited in online scams.

Under the current law, online scams on secondhand or investment platforms are not classified as financial fraud. The Special Act on the Prevention of Loss Caused by Telecommunications-based Financial Fraud and Refund for Loss states that if a bank suspects that an account is being exploited for telecommunications-based financial fraud involving tactics like voice phishing, it must immediately take measures to suspend payments on all such accounts.