According to data the Financial Supervisory Service submitted to Rep. Kim Hyung-yeon of the Rebuilding Korea Party on Oct. 21, an inspection of high-risk business loans extended between July last year and February this year uncovered 178 violations worth 68.59 billion won. That exceeds the 127 violations worth 58.75 billion won found in an inspection last year of mortgage loans taken out by sole proprietors. Violations detected over the past two years total 127.3 billion won.
The latest review focused on high-risk loans with a strong likelihood of misuse, including cases where multiple-home owners took out mortgages on properties in Seoul's three Gangnam-area districts, where the business registration date fell within six months of the loan date, and where the borrower operated in wholesale or retail but listed an apartment in the three Gangnam districts as the business address.
The FSS found that one sole proprietor took out a 400 million won corporate working-capital loan in February last year and spent 399 million won of it buying a home in a regulated zone. Another borrower in the real estate rental business used a business loan to purchase a commercial-residential building, ostensibly for rental purposes, then moved in and lived there.
Previously, when misuse was uncovered, authorities barred the borrower from taking out new business loans only at the financial firm where the violation was detected. Going forward, such borrowers will be blocked from borrowing across the entire financial sector. The ban periods were also extended by two years and five years, respectively, to three years for a first offense and 10 years for a second. "We share detection results with other agencies, including the National Tax Service and the Korean National Police Agency, through bodies such as the council on responding to illegal real estate activity," an FSS official said. "We will continue to monitor the misuse of business loans for unintended purposes."