ACT ON REAL NAME FINANCIAL TRANSACTIONS AND CONFIDENTIALITY

Article 1(Purpose) #

The purpose of this Act is to realize economic justice and to facilitate the sound development of national economy by implementing real name financial transactions and ensuring the confidentiality thereof through normalized financial transactions.

[This Article Wholly Amended on Jul. 14, 2011]

Article 2(Definitions) #

The definitions of terms used in this Act are defined as follows: <Amended on May 29, 2016>

1. The term "financial companies, etc." means:

(a) Banks under the Banking Act;

(b) The Industrial Bank of Korea under the Industrial Bank of Korea Act;

(c) The Korea Development Bank under the Korea Development Bank Act;

(d) The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act;

(e) The Bank of Korea under the Bank of Korea Act;

(f) An investment trader, investment broker, collective investment business entity, trust business entity, financial securities company, merchant bank, and a transfer agency company under the Financial Investment Services and Capital Markets Act;

(g) Mutual savings banks and the Federation of Savings Banks under the Mutual Savings Banks Act;

(h) Cooperatives, the National Agricultural Cooperative Federation, and NongHyup Bank under the Agricultural Cooperatives Act;

(i) Cooperatives, the National Federation of Fisheries Cooperatives, and Suhyup Bank under the Fisheries Cooperatives Act;

(j) Credit unions and the National Credit Union Federation under the Credit Unions Act;

(k) Community credit cooperatives and the Korean Federation under the Community Credit Cooperatives Act;

(l) Insurance companies under the Insurance Business Act;

(m) Communications agencies under the Postal Savings and Insurance Act;

(n) Other institutions prescribed by Presidential Decree;

2. The term "financial assets" means cash and securities, such as demand deposits, installment deposits, installments, fraternity dues, depositary receipts, investments, trust property, stocks, bonds, beneficiary certificates, contribution quotas, bills, checks and debt certificates that are dealt with by financial companies, etc., and other similar items prescribed by Ordinance of the Prime Minister;

3. The term "financial transactions" means transactions in which financial companies, etc. receive, sell and purchase, repurchase, mediate, discount, issue, redeem, return, are entrusted with, register, or exchange financial assets, or in which financial companies, etc. pay interest, money discounted, or dividends of those financial assets or carry out such payment as an agent, or other transactions involving financial assets prescribed Ordinance of the Prime Minister;

4. The term "real name" means a name entered in a resident registration card, a name entered in a business registration certificate, or any other name prescribed by Presidential Decree.

[This Article Wholly Amended on Jul. 14, 2011]

Article 3(Financial transactions under real name) #

(1) Financial companies, etc. shall perform financial transactions with customers under their real names.

(2) Notwithstanding the provisions of paragraph (1), financial companies, etc. need not to verify real names of the customers concerned in case of any transactions falling under any of the following subparagraphs:

1. Continuous transactions by accounts in which the real names of the customers have been verified, and transactions such as receipt of public impositions and transfers of not more than one million won, as prescribed by Presidential Decree;

2. Transactions such as the purchase of foreign currency, receipt of deposits in foreign currency or transfers of bonds in foreign currency, during the period prescribed by Presidential Decree;

3. Transactions of bonds that fall under any of the following (hereinafter referred to as "specific bonds") and are issued under the issue terms such as the period of issue, interest rate, and maturity as determined by the Minister of Finance and Economy between the enforcement date (December 31, 1997) of the Act on Real Name Financial Transactions and Confidentiality (Act No. 5493) and December 31, 1998:

(a) Bonds issued for employment stabilization, improvement of workers' vocational abilities and livelihood stabilization prescribed by Presidential Decree;

(b) Bonds in foreign currency that are foreign exchange equalization fund bonds referred to in Article 13 of the Foreign Exchange Transactions Act;

(c) Bonds issued for restructuring assistance to small and medium businesses, as prescribed by Presidential Decree;

(d) Corporate bonds issued by a securities finance company under Article 329 of the Financial Investment Services and Capital Markets Act;

(e) Other bonds issued for the stabilization of people's livelihood and the sound development of the national economy, as determined by Presidential Decree.

(3) No person shall perform financial transactions under the real name of another person for the purpose of concealing illegitimate property under subparagraph 4 of Article 2 of the Act on Reporting and Using Specified Financial Transaction Information, money laundering under subparagraph 5 of the aforementioned Article or financing of terrorism and evading compulsory execution under subparagraph 6 of the aforesaid Article, and other evasions of the law. <Added on May 28, 2014; Mar. 24, 2020>

Article 4(Confidentiality of financial transactions) #

(1) No person working for a financial company, etc. shall provide or reveal information or data concerning the contents of financial transactions (hereinafter referred to as "transaction information, etc.") to other persons unless he or she receives a request or consent in writing from the holder of a title deed (in case of trust, meaning a truster or beneficiary), and no person may request a person working for a financial company, etc. by fraud or other improper means or methods to provide transaction information, etc.; provided, the same shall not apply in any of the following cases in which the said transaction information, etc. is requested or provided to the minimum limit necessary for the purpose of use thereof: <Amended on May 28, 2013; Nov. 26, 2019; Dec. 29, 2020; Apr. 1, 2025>

1. Provision of transaction information, etc. by a court order to produce evidence, or by a warrant issued by a judge;

2. Provision of tax data that must be submitted under tax-related Acts, and provision of transaction information, etc. necessary for the heads of the competent agencies to confirm inherited or donated property, confirm evidence to show a suspicion of tax evasion, inquire into the property of taxpayers in arrears (including a person falling under any of the following items deemed suspicious of concealing the property of a taxpayer in arrears, in the case of a person with unpaid taxes of at least 50 million won), or make inquiries and investigation under tax-related Acts due to the cause falling under any subparagraph of Article 9 (1) of the National Tax Collection Act:

(a) Spouse of a taxpayer in arrears (including a person in a de facto marital relationship);

(b) Blood relatives of the taxpayer in arrears within the sixth degree of relationship;

(c) Affinity relatives of the taxpayer in arrears within the fourth degree of relationship;

3. Provision of transaction information, etc. by the Governor of the Financial Supervisory Service (referring to the Governor of the Financial Supervisory Service under Article 24 of the Act on the Establishment, etc. of Financial Services Commission; hereinafter the same shall apply) and the President of the Korea Deposit Insurance Corporation (referring to the President of the Korea Deposit Insurance Corporation under Article 3 of the Depositor Protection Act; hereinafter the same shall apply), as necessary for the legislative investigation of state affairs under the Act on the Inspection and Investigation of State Administration, through a resolution by the relevant investigation committee;

Article 4-2(Notice of fact of providing transaction information) #

(1) Where financial companies, etc. has provided transaction information, etc. with the written consent of the holder of a title deed, or has provided it pursuant to Article 4 (1) 1, 2 (excluding taxable data, etc. that shall be submitted under the tax-related Acts), 3 and 8, the financial companies, etc. shall notify in writing the holder of the title deed of the major contents, purpose of use, person provided, date of provision, etc., within 10 days from the date of such provision (where such notice is deferred under paragraph (2) or (3), the date on which the deferred period of notice expires).

(2) Where financial companies, etc. receive a written request for a deferment of notice from a requester for transaction information, etc. subject to notice on the grounds falling under any of the following subparagraphs, the financial companies, etc. shall defer such notice for the requested deferment period (six months where the deferment of notice has been requested for six months or longer on the grounds of subparagraph 2 or 3), notwithstanding the provisions of paragraph (1):

1. Where the relevant notice carries a matter of concern about threatening the safety of human life or body;

2. Where the relevant notice carries a matter of obvious concern about obstructing the progress of a fair judicial process such as destruction of evidence or threat to witness;

3. Where the relevant notice carries a matter of obvious concern about obstructing, or delaying to excess, the progress of administrative procedures such as an interrogation or investigation.

(3) Where a requester for transaction information, etc. presents that the reason falling under any subparagraph of paragraph (2) is continued and repeatedly requests in writing a deferment of notice, financial companies, etc. shall defer such notice for the requested deferment period within the limit of three months for each time, limited to only twice from the date of such request (excluding the case of paragraph (2) 1); provided, where a requester for transaction information, etc. under Article 4 (1) 2 (excluding taxable data, etc. that shall be submitted under the tax-related Acts) requests a deferment of notice, it shall defer such notice for the requested deferment period within the limit of six months from the date of request each time it is requested.

(4) Expenses spent by financial companies, etc. to notify the title holder of the fact of provision of transaction information, etc. under paragraph (1) shall be borne by anyone who has requested provision of such transaction information, etc. pursuant to Article 4 (1), as prescribed by Presidential Decree.

Article 4-3(Record and management of details concerning provision of transaction information) #

(1) Financial companies, etc. shall record and manage, pursuant to the standard form as stipulated by the Financial Services Commission, information containing each of the following subparagraphs, in cases where it has provided transaction information, etc. to other persons than the holder of a title deed with his or her written consent, has received a request for provision of transaction information, etc. from other persons than the holder of a title deed pursuant to Article 4 (1) 1, 2 (excluding taxable data, etc. that shall be submitted under the tax-related Acts), 3, 4, 6, 7 or 8 or has provided transaction information, etc. to other persons than the holder of a title deed: <Amended on Aug. 13, 2013; Dec. 11, 2018>

1. Personal information on a requester (person in charge and responsible person), details and date of such request;

1-2. Purpose of the use of information (excluding cases where transaction information, etc. is provided to other persons than the holder of a title deed with his or her written consent);

2. Personal information on a provider (person in charge and responsible person) and the date of provision;

3. Details of transaction information, etc. provided;

4. Legal grounds for provision;

5. Date on which the financial company, etc. has notified the holder of the title deed;

6. Where notice is deferred, the date of and grounds for deferring the notice, and the period and number of such deferment.

(2) Records under paragraph (1) shall be preserved for five years from the date of provision of transaction information, etc. (where such provision has been refused, the date of receiving a request for such provision).

(3) Where provision of transaction information, etc. is requested pursuant to any of the following Acts, paragraphs (1) and (2) shall be applicable: <Amended on Mar. 24, 2020>

1. Article 27 (2) of the Board of Audit and Inspection Act;

2. Article 52 (2) of the Political Funds Act;

3. Article 8 (5) of the Public Service Ethics Act;

4. Deleted; <Dec. 29, 2020>

5. Article 83 (1) of the Inheritance Tax and Gift Tax Act;

6. Article 13 (3) of the Act on Reporting and Using Specified Financial Transaction Information;

Article 4-4(Duties of Financial Services Commission) #

The Financial Services Commission shall ascertain and analyze the current status on demand for, provision of, notice of and deferment of such notice of transaction information, etc. under this Act or other statutes, and at the request of the National Assembly, submit a report thereon to the National Assembly. <Amended on Aug. 13, 2013; Dec. 11, 2018>

[This Article Wholly Amended on Jul. 14, 2011]

Article 5(Differential taxation on income accruing from non-real name assets) #

With respect to the income from interest and dividends accruing from financial assets transacted under non-real names, the withholding tax rate for income tax shall be 90/100 [20/100 (15/100 on and after January 1, 2001) for the income from interest arising from specific bonds], and such income shall not be included in the calculation of tax base for global income referred to in Article 14 (2) of the Income Tax Act.

[This Article Wholly Amended on Jul. 14, 2011]

Article 5-2(Administrative measures) #

(1) Where the Financial Services Commission discovers that financial companies, etc. violate this Act, or orders or instructions under this Act, it may take measures falling under any of the followings or require the head of a related administrative agency having the authority to impose administrative sanctions on the business of the relevant financial company, etc. to take such measures:

1. Orders to correct or stop an offense;

2. Orders to officially announce or post a notice of the fact that the financial company, etc. has been subject to measures due to an offense;

3. Warning to an organization;

4. Caution to an organization.

(2) Where financial companies, etc. fall under any of the followings, the Financial Services Commission may require the financial companies, etc. to suspend all or any part of its business or require the head of a related administrative agency having the authority to impose administrative sanctions on the business of the relevant financial companies, etc. to take such measures:

1. Where it fails to comply with orders under paragraph (1) 1 and 2;

2. Where it receives a warning to an organization under paragraph (1) 3 at least three time;

3. Where it is likely to undermine considerably healthy financial transactional order or interest of customers because it violates this Act or orders or instructions under this Act.

(3) Where the Financial Services Commission discovers that an executive officer or employee of a financial company, etc. has violated this Act or orders or instructions under this Act, it may require the head of the relevant financial companies, etc. to take measures in accordance with the following classification:

1. Executive officer: Measures falling under any of the followings:

(a) Release from office;

(b) Suspension from office within six months;

(c) Reprimand and warning;

(d) Cautionary warning;

(e) Caution;

2. Employee: Measures falling under any of the followings:

(a) Dismissal from office;

(b) Suspension from office within six months;

Article 6(Penalty provisions) #

(1) A person that violates the provisions of Article 3 (3) or (4), Article 4 (1) or (3) through (5) shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding 50 million won. <Amended on May 28, 2014>

(2) Penalty of imprisonment with labor and fines pursuant to paragraph (1) may be concurrently imposed.

[This Article Wholly Amended on Jul. 14, 2011]

[Simple unconstitutionality, 2020 Constitutional Act No. 5, 2022.2.24, formerly the Act on Financial Secrecy Transactions and Confidentiality (amended by Act No. 16651 of November 26, 2019, and amended by Act No. 17758 of December 29, 2020), Article 4 (1), "No person shall require a person engaged in a financial company to provide transaction information, etc." and Article 6 (1) of that Act, "No person shall require a person engaged in a financial company to provide transaction information, etc. The part of Article 4 (1) of the Act on Financial Real Name Transactions and Secrecy (as amended by Act No. 17758 of December 29, 2020) that states that "No person shall require a person engaged in a financial company to provide transaction information, etc." and the above part of Article 6 (1) of that Act are unconstitutional].

Article 7(Administrative fines) #

(1) An administrative fine not exceeding 30 million won shall be imposed on an executive officer or employee of a financial company, etc. who violates Article 3, 4-2 (1) and (5) (limited to cases where Article 4-2 (1) applies) or 4-3. <Amended on May 28, 2014>

(2) Administrative fines pursuant to paragraph (1) shall be imposed and collected by the Financial Services Commission, as prescribed by Presidential Decree.

[This Article Wholly Amended on Jul. 14, 2011]

Article 8(Joint penalty provisions) #

If the representative of a legal entity, or an agent, an employee, or any other employed person of a legal entity or an individual commits an act of violation under Article 6 or 7 in connection with the business of the legal entity or the individual, not only shall such an actor be punished accordingly, but also the legal entity or the individual shall be punished by a fine or an administrative fine under the same Article; provided, this shall not apply in cases where the legal entity or the individual has not neglected to supervise that business with due care in order to prevent the act of violation.

[This Article Wholly Amended on Jul. 14, 2011]

Article 9(Relationship to other statutes) #

(1) Where this Act conflicts with other statutes, this Act shall apply.

(2) Notwithstanding the provisions of paragraph (1), at the time the Presidential Financial and Economic Emergency Order on Real Name Financial Transactions and Confidentiality enters into force, statutes applied in preference to the said Presidential Financial and Economic Emergency Order shall apply in preference to this Act.

[This Article Wholly Amended on Jul. 14, 2011]

Article 10(Entrustment of authority) #

The Financial Services Commission may entrust part of its authority under this Act to the Governor of the Financial Supervisory Service, as prescribed by Presidential Decree.

[This Article Added on Jan. 26, 2021]