Strengthening the level of punishment for illegal private finance
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In the future, illegal private finance companies will not receive interest in excess of 6% per year.
The Financial Services Commission announced on the 29th that the amendment to the loan business law with such details has passed the State Council. The essence of the bill is to limit the illegal gains of illegal private financiers. Previously, even if an illegal loan was offered in excess of the maximum interest rate due to non-registration, only the portion exceeding 24% was recognized as the subject of a refund request. Now, the target of return is expanded to interest paid in excess of the legal interest rate of 6%. For registrars, interest can be earned up to 24%. It is intended to induce illegal businessmen to register for loan business. In addition, the practice of illegal contractors increasing overdue interest and re-loaning or giving out loans without a contract was also negated.
Penalties for illegal private finance are also strengthened. In the case of violating the maximum interest rate, the level of punishment was raised from a fine of 30 million won or less in imprisonment for three years or less to a fine of 50 million won or less in imprisonment for three years or less. In the case of unregistered operations, the fine was doubled to 100 million won. A new obligation has been clearly established for the collection company to collect without contract documents or the lender to refuse to return the original contract.
Earlier, in June, the government jointly promoted the eradication of illegal private finance. As a result of the intensive crackdown from June to November, 4,138 illegal private financiers were arrested and 49 were arrested. The average number of arrests per month increased by 74% compared to before the intensive crackdown. There were also 272,000 cases of illegal private financial advertisements impersonating a financial company or inducing mobile phone micro-payments and credit card payments into cash. 6,663 related phone numbers were suspended.
The Financial Services Commission said, “We will closely discuss with the National Assembly so that the bill can be passed by the National Assembly as soon as possible. We will proactively respond to concerns about the increase in illegal private finance that may occur when the highest interest rate is cut.”
/ Reporter Kim Ji-young [email protected]
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