A foreign national identified as A made a direct transaction for Seoul dwellings with child B for 1.18 billion won. Buyer B raised about 300 million won of this through overseas remittances and multiple hand-carries. The Ministry of Land, Infrastructure and Transport notified the Korea Customs Service, suspecting illegal import of overseas funds. A partially returned the transaction price and was flagged to the National Tax Service on suspicion of de facto gifting.
A large number of foreign nationals who purchased officetels and land through "hwanchigi" — illegally bringing in funds without going through a foreign exchange bank — and other methods were caught. The government plans follow-up measures, including police investigations, on non-dwellings and land transactions by foreign nationals suspected of illegal acts.
The Ministry of Land, Infrastructure and Transport and the Office for Government Policy Coordination's real estate oversight task force said on the 30th that, through a special probe into suspicious transactions of foreign nationals involving non-dwellings (officetels) and land launched in September, it detected 88 cases of suspected violations (126 suspected illegal acts).
Given that during the same period there were 167 reports of real estate transactions by foreign nationals — 36 each for dwellings and land, and 95 for non-dwellings — 67% of non-dwellings and land were suspected illegal transactions.
Earlier, in Nov., the Ministry of Land, Infrastructure and Transport (MOLIT) said it detected 210 suspected illegal transactions (290 suspected illegal acts) through a special probe into suspicious transactions involving foreign nationals' dwellings and notified relevant agencies.
The types of suspected illegal transactions uncovered in this special probe include: ▲ illegal import of overseas funds ▲ unqualified leasing business ▲ de facto gifting ▲ diversion of loan funds to non-permitted uses ▲ false reporting of transaction amount and contract date ▲ illegal resale.
Illegal import of overseas funds applies to cases suspected of bringing in funds by carrying in cash exceeding $10,000 from abroad without filing a report, or through "hwanchigi (illegal import of funds without going through a foreign exchange bank)." Foreign national C purchased an officetel in Seoul but explained that 365 million won of the 395 million won sale price was raised through overseas remittances and multiple hand-carries of cash. However, as C was suspected of illegal import without a foreign currency import report, the Ministry of Land, Infrastructure and Transport (MOLIT) notified the Korea Customs Service.
A foreign national suspected of running a leasing business without permission for activities outside the person's status while staying under a status that does not allow leasing was also caught. Foreign national D entered Korea for a short stay of up to 90 days and, lacking a separate status, could not engage in leasing activities, but still bought a Seoul officetel and signed a monthly rent contract with a 120 million won deposit, earning rental revenue. The Ministry of Land, Infrastructure and Transport (MOLIT) notified the Ministry of Justice on suspicion of unqualified rental revenue by D.
In addition, cases were detected where a related party (parent, corporations, etc.) lent real estate transaction funds to the buyer (child, corporate representative, etc.) without a loan agreement or where confirmation was needed on whether appropriate interest was paid, and where an individual business operator was suspected of purchasing real estate after taking out a bank loan for corporate working capital.
This special probe also revealed foreign nationals suspected of reporting a transaction amount and contract date that differed from reality when conducting a real estate transaction. A foreign national suspected of illegal resale was also caught after having only a relative receive the allocation on their behalf while paying the down payment directly to the builder, then engaging in a direct transaction of the allocation right once the resale restriction period ended.
The Ministry of Land, Infrastructure and Transport (MOLIT) plans to notify relevant agencies — including the Ministry of Justice, the Financial Services Commission (FSC), the National Tax Service, the Korea Customs Service, and local governments — regarding the suspected illegal acts detected so that follow-up measures such as police investigations and collection of unpaid taxes can proceed.
In addition, the Ministry of Land, Infrastructure and Transport (MOLIT) plans to continue special probes into suspicious transactions involving foreign nationals' dwellings, non-dwellings, and land next year to root out real estate-related illegal acts by foreign nationals.
The Ministry of Land, Infrastructure and Transport (MOLIT) also designated foreign land transaction permit zones in key areas of Seoul, Gyeonggi, and Incheon in Aug., and since four months have passed since the designation took effect, it plans to conduct on-site inspections with local governments alongside special probes and take stern measures, such as imposing compliance fines, for violations of the actual-residence requirement by foreign nationals.
Kim Gyu-cheol, director general for housing and land at the Ministry of Land, Infrastructure and Transport (MOLIT), said, "For illegal acts arising in the course of foreign nationals' real estate transactions, we will respond strictly without distinguishing between dwellings, non-dwellings, and land," adding, "We plan to continue strengthening management and oversight across all real estate transactions by foreign nationals, in cooperation with relevant agencies such as the Office for Government Policy Coordination, the Ministry of Justice, the National Tax Service, and the Korea Customs Service, to establish transaction order in the real estate market."