Reporting victimization from illegal private lending can bring leniency for minor violations; police launch six-month special crackdown

[Financial News] Police are launching a nationwide six-month special crackdown to stamp out illegal private lending crimes. Minor violations uncovered when victims report their cases may receive reduced sanctions, depending on the circumstances, and informants who help capture key offenders will be eligible for rewards of up to 125 million won.
The Korean National Police Agency’s National Office of Investigation announced on the 1st that it will conduct a nationwide special crackdown on illegal private lending from the 2nd through April 30 next year. A special surrender and reporting period will run through December 31 to encourage victims to report their victimization and people involved in the crimes to turn themselves in.
According to police, reported cases of illegal private lending rose from 2,126 in 2023 to 3,391 in 2024 and 5,519 last year. Arrests over the same period also increased each year, from 1,400 to 1,975 and 3,366. From January through September this year, there were 4,405 reported cases and 2,438 arrests, up 5.3% and 2.7%, respectively, from the same period a year earlier.
The crackdown will focus on unregistered illegal lending businesses, the collection of interest exceeding the statutory annual rate of 20%, and illegal debt collection. New and variant forms of illegal lending that use diverse transaction methods, including gift certificates and virtual assets, will also be major targets.
To that end, dedicated teams will be formed within the Anti-Corruption and Economic Crime Investigation Units and Metropolitan Criminal Investigation Units of metropolitan and provincial police agencies across the country. Major cases involving organized crimes or new methods will be investigated intensively by the dedicated teams.
Police will also deploy 159 investigators specializing in illegal private lending, designated last July at 105 police agencies nationwide. Alongside their investigations, police plan to focus on protecting victims.
During the special surrender and reporting period, victims will be able to receive reduced sanctions even if they have engaged in minor illegal acts—such as lending their bank accounts or USIM cards under pressure from illegal lenders’ collection efforts. After considering their financial circumstances, motives, and degree of involvement, cases will be reviewed by a police station Minor Offense Review Committee, and victims may be released with a warning or receive reduced sanctions through summary proceedings.
People involved in illegal private lending crimes who turn themselves in may also have their sentences reduced or waived, following consultations with relevant agencies. Reports and surrenders can be made by calling 112 or at any police agency nationwide, and there are no specific restrictions on how reports can be made.
People who report or provide tips and help capture offenders will receive rewards of up to 125 million won, depending on their contribution.
Meanwhile, an amendment to the Loan Business Act that took effect last July increased the statutory penalties for operating an illegal private lending business and for illegal loan advertisements to up to 10 years in prison or a fine of up to 500 million won. Antisocial loan agreements with annual interest rates exceeding 60% or involving violence or threats are void as to both principal and interest, and borrowers can also recover principal and interest they have already paid.
Hong Seok-gi, head of the Korean National Police Agency’s National Office of Investigation, stressed, “Through this special crackdown, we plan to root out the criminal ecosystem of illegal private lending, an exploitative financial crime that destroys ordinary people’s lives,” adding, “We will track down and seize criminal proceeds to the very end so that no one can gain any economic benefit whatsoever from illegal private lending.”

[email protected] Kim Ye-ji Reporter