South Korean Banks Freeze 150,000 Accounts Linked to Financial Scams Amidst Investment Fraud Surge

South Korean banks froze nearly 150,000 accounts in the past year due to their involvement in financial fraud. This surge is attributed to a rise in new investment scams, particularly stock "reading rooms" (investment advisory services), amidst a booming stock market, even as voice phishing incidents decrease.

From May of last year to the end of last month, the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) froze a total of 149,176 accounts due to financial fraud. The number of frozen accounts per month reached between 12,000 and 15,000 from November last year to May this year. In the first five months of this year alone, the number of frozen accounts (over 72,000) more than doubled compared to the same period last year (over 32,000).

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Recently, with the booming stock market, we seem to be seeing an increase in reports of damage related to investment scams like investment reading rooms.

While post-fraud account freezes are on the rise, the number of temporary transaction blocks initiated by banks' own "Fraud Detection Systems" (FDS) has decreased by 21% compared to the previous year. This suggests that banks' FDS are struggling to effectively detect newer forms of phishing crimes. One bank official noted that banks find it difficult to proactively take temporary measures due to unclear legal grounds, and that sophisticated fraud schemes, including psychological manipulation of victims, make it hard to obtain cooperation for such actions.

Despite the increase in investment scams, overall voice phishing incidents have decreased. According to financial authorities, the number of voice phishing cases from October last year to April this year fell by 35.5% compared to the same period the previous year.

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In cases of new phishing crimes, it is difficult for financial companies to proactively take temporary measures due to unclear legal grounds.