South Korean woman fined $20,000 for illegal lending of nearly $800,000

A woman in her 50s has been ordered to pay a 20 million won fine for running an illegal moneylending operation and charging exorbitant interest rates. The ruling came after she was found guilty of violating the Act on the Registration and Financial Consumer Protection of Moneylenders.

The accused, identified as Ms. A, 56, operated as an unregistered moneylender. Prosecutors alleged that starting around October 3, 2018, she engaged in illegal lending activities. In one instance, she lent 10 million won to an individual, B, but deducted 600,000 won as advance interest for two months, resulting in a disbursed amount of only 9.4 million won. This practice significantly exceeded the legal annual interest rate limit of 20% for unregistered lenders.

Investigations revealed that Ms. A's illegal activities extended beyond this single case. From late 2018 until March 25, 2024, she lent a total of 794.5 million won to six different individuals across 51 transactions. During this period, she collected interest that surpassed the legal limits on 50 occasions.

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The defendant's unregistered moneylending period is long, and the loan amount exceeds 790 million won.

During the trial, Ms. A's defense argued that some of the charges should be dismissed due to the statute of limitations, citing a five-year period for violations occurring before November 10, 2020. However, the court rejected this argument. Presiding Judge Kang Shin-young explained that repeated violations against the same victim constitute a single, continuous offense, meaning the statute of limitations is applied from the date of the last violation. The court found Ms. A guilty of all charges.

In determining the sentence, the court considered several factors. While acknowledging the long duration of her unregistered lending activities and the substantial amount involved (over 790 million won), the judge noted that Ms. A did not widely advertise her services but rather lent money primarily to acquaintances or individuals introduced by them. Furthermore, the court took into account that most borrowers had applied for personal rehabilitation, indicating limited repayment capacity. Ms. A had also reportedly been subjected to a tax investigation, resulting in a tax liability exceeding 200 million won. These factors contributed to the decision to impose a fine rather than imprisonment. Ms. A's defense has indicated plans to appeal the ruling.

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However, it is judged that the defendant did not solicit borrowers through advertising to an unspecified number of people, but rather lent money centered around acquaintances or those introduced by them.