#A, a foreign national, bought a single-family dwelling in Seoul for 12.5 billion won and financed the entire transaction amount with deposits at a financial institution. A remitted business income earned overseas to a bank in a third country and then deposited it back into a bank in Korea to raise the funds. The buyer did not substantiate the specific level of business income earned overseas. In Korea, A's earned income averages 90 million won a year, making the source of funds for the high-priced dwelling unclear based on that income.
#B, a foreign national, purchased a 6.8 billion won apartment in Seoul and borrowed 4.6 billion won from a corporation in which B is a shareholder (a related party) to use for the transaction amount. The government views this as excessive borrowing fund from a related party.
Of two anomalous transactions detected recently during foreigners' acquisition of domestic dwellings, one was found to be suspected of violating the law. There were cases of illegally bringing in overseas funds or entering into "up/down contracts" that recorded different transaction amounts. Indications of de facto gifting and misuse of business loans for nonapproved purposes were also detected.
The Office for Government Policy Coordination real estate supervision task force held the second consultative meeting on responses to illegal real estate acts at Government Complex Seoul on the 17th and decided to take strong action on 210 anomalous transactions by foreigners in dwellings uncovered by the Ministry of Land, Infrastructure and Transport.
As a result of a special investigation into foreigners' dwelling transactions from June last year to June this year, the Ministry of Land, Infrastructure and Transport (MOLIT) conducted in-depth probes into a total of 438 anomalous transactions and detected 290 suspected illegal acts in 210 transactions (47.9%). In one out of two anomalous transactions, suspected illegal acts were uncovered.
The main suspected types of illegal acts are as follows: ▲ illegal import of overseas funds ▲ unqualified leasing business ▲ de facto gifting ▲ misuse beyond loan purposes ▲ name lending, etc.
By type, 39 cases were detected in which individuals are suspected of carrying in cash exceeding $10,000 from overseas without declaration, or bringing in funds through "hwanchigi" ("illegal remittance without going through a foreign exchange bank").
There were five cases suspected of engaging in a leasing business without permission for activities outside status while staying under a status ineligible for leasing, such as the H2 visit and employment visa. There were 57 cases where a related party (parents, corporations, etc.) lent the dwelling transaction amount to the buyer (child, corporate representative, etc.) and the presence of a loan agreement or whether appropriate interest was paid needed to be verified.
There were 13 cases suspected of an individual business operator obtaining a loan from a financial institution for corporate working capital purposes and then purchasing a dwelling such as a dwelling.
There were 14 cases suspected that, during a dwelling transaction, the beneficial owner of the dwelling differed from the name on the certificate of all registered matters, and 162 cases suspected of reporting a transaction amount and contract date that differed from reality when conducting a dwelling transaction.
MOLIT plans to complete by year-end its investigation into 167 anomalous transactions among foreigners' non-dwelling (officetels) and land transactions carried out from July last year to July this year.
The Office for Government Policy Coordination real estate supervision task force plans to notify relevant agencies, including the Ministry of Justice, National Tax Service, Korea Customs Service, Korean National Police Agency, and the competent local governments, of the suspected illegal transactions detected and ensure strict follow-up measures such as tax investigations, investigations and referral to prosecutors, and loan recalls, depending on the violations. In addition, it will actively review raising the level of sanctions and penalties to eradicate illegal real estate transactions by foreigners.
Kim Gyu-cheol, director general for Housing and Land at MOLIT, said, "We expect this special investigation to help eradicate illegal acts that may occur in the process of foreigners' real estate transactions," adding, "We will also proceed without a hitch by year-end with the ongoing special investigations into anomalous dwelling transactions in the Seoul metropolitan area and anomalous non-dwelling and land transactions by foreigners, and will continue efforts to establish order in real estate market transactions."
Kim Yong-su, head of the real estate supervision task force, said, "As foreigners' illegal transaction acts can disrupt order in the domestic dwelling market and cause serious suffering to the public due to market instability, each agency, including the Ministry of Justice, National Tax Service, Korea Customs Service, and Korean National Police Agency, will take the strictest possible action."