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SPECIAL ACT ON THE PREVENTION OF LOSS CAUSED BY TELECOMMUNICATIONS-BASED FINANCIAL FRAUD AND REFUND FOR LOSS

Act No. 10477, Mar. 29, 2011

Amended by Act No. 12384, Jan. 28, 2014

Act No. 13928, Jan. 27, 2016

Act No. 14242, May 29, 2016

Act No. 14839, Jul. 26, 2017

Act No. 15472, Mar. 13, 2018

 Article 1 (Purpose)
The purpose of this Act is to prescribe Government measures to prevent loss and finance companies' responsibilities for the prevention of loss in an attempt to prevent telecommunications-based financial fraud, and to stipulate procedures for extinguishment of claims for accounts exploited for fraud, procedures for the compensation of loss, etc. in order to compensate loss to victims of telecommunications-based financial fraud so as to contribute to the prevention of telecommunications-based financial fraud and rapid recovery of property loss of victims.
[This Article Wholly Amended by Act No. 12384, Jan. 28, 2014]
 Article 2 (Definitions)
The definitions of terms used in this Act shall be as follows: <Amended by Act No. 12384, Jan. 28, 2014; Act No. 14242, May 29, 2016>
1. The term "finance company" means any of the following institutions:
(a) A bank under the Banking Act;
(b) The Korea Development Bank under the Korea Development Bank Act;
(c) The Industrial Bank of Korea under the Industrial Bank of Korea Act;
(d) The Export-Import Bank of Korea under the Export-Import Bank of Korea Act;
(e) An investment trader, investment broker, syndicate business entity, trust business entity, financial securities company, merchant bank, and transfer agency under the Financial Investment Services and Capital Markets Act;
(f) A mutual savings bank and the Korea Federation of Savings Banks under the Mutual Savings Banks Act;
(g) An agricultural cooperative and the National Agricultural Cooperatives Federation and Nonghyup Bank under the Agricultural Cooperatives Act;
(h) A fisheries cooperative, the National Federation of Fisheries Cooperatives, and Suhyunp Bank under the Fisheries Cooperatives Act;
(i) A credit union and the National Credit Union Federation of Korea under the Credit Unions Act;
(j) A community credit cooperative and the Korean Federation of Community Credit Cooperatives under the Community Credit Cooperatives Act;
(k) An insurance company under the Insurance Business Act;
(l) A postal service office under the Postal Savings and Insurance Act;
(m) Other institutions providing financial services prescribed by Presidential Decree;
2. The term "telecommunications-based financial fraud" means any of the following acts intended to take economic gains or make a third person take economic gains by deceiving or extorting other persons, using telecommunications under subparagraph 1 of Article 2 of the Framework Act on Telecommunications: Provided, That feigning the provision, arrangement, and brokerage of loans shall be included whereas feigning the supply of goods or services, etc. shall be excluded:
(a) Inducing a person to remit or transfer money;
(b) Remitting or transferring money after extracting personal information;
2-2. The term "electronic financial transaction" means a transaction in which a finance company provides a user with a financial product or service via electronic devices and such user, without meeting or communicating directly with employees of finance companies, uses such product or service via automated means;
3. The term "victim" means a person that has suffered economic loss due to telecommunications-based financial fraud;
4. The term "account exploited for fraud" means the account from which money of a victim has been remitted or transferred or the account exploited for transfer of money from the relevant account;
5. The term "amount of loss" means money remitted or transferred from the account of a victim to the account exploited for fraud due to telecommunications-based financial fraud;
6. The term "compensation for loss" means money paid by a finance company to a victim, which is calculated pursuant to Article 10 based on a claim extinguished pursuant to Article 9, in order to compensate the amount of loss;
7. The term "user" means a person that engages in electronic financial transactions under a contract concluded with a finance company.
 Article 2-2 (Response, etc. to Telecommunications-Based Financial Fraud)
(1) To prepare for telecommunications-based financial fraud and minimize any loss, the Financial Services Commission shall conduct the following duties:
1. Collection and distribution of information on telecommunications-based financial fraud;
2. Forecasting and warning on telecommunications-based financial fraud;
3. Other countermeasures prescribed by Presidential Decree to respond to telecommunications-based financial fraud.
(2) When deemed necessary to prevent telecommunications-based financial fraud, the Financial Services Commission may recommend, request, or order the following matters to finance companies falling within the criteria determined by the Financial Services Commission or executives or employees of such companies, or order such companies and executives to submit improvement plans, considering the annual amount of compensation paid for loss and the number of occurrence of exploited accounts for fraud:
1. Cautioning, warning, reprimanding or reducing salary of finance companies and executives or employees of such companies;
2. Matters concerning improvement or supplementation of personnel and facilities for computerization, electronic devices, etc., that are necessary for finance companies to secure safety and reliability in conducting electronic financial transaction business.
(3) The Financial Services Commission may fully or partially entrust the duties referred to in paragraphs (1) and (2) to the Governor of the Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as “FSS Governor").
[This Article Newly Inserted by Act No. 12384, Jan. 28, 2014]
 Article 2-3 (International Cooperation)
The Government shall cooperate with other nations or international organizations to prevent loss that may be caused by telecommunications-based financial fraud.
[This Article Newly Inserted by Act No. 12384, Jan. 28, 2014]
 Article 2-4 (Responsibilities, etc. of Finance Companies for Prevention of Loss)
(1) To prevent loss that may be caused by telecommunications-based financial fraud, when a user conducts any of the following, every finance company shall take measures to identify such user as prescribed by Presidential Decree (hereinafter referred to as "measure for identification"): Provided, That the same shall not apply to cases prescribed by Presidential Decree where a user as a corporation does not wish to proceed with measures for identification or where it is impracticable to take measures for identification such as where a user is sojourning abroad: <Amended by Act No. 13929, Jan. 27, 2016>
1. Where a user applies for a loan to a finance company;
2. Where a user withdraws a savings deposit, installment savings, and premiums he/she has subscribed under a contract concluded with a finance company, or other financial products prescribed by Presidential Decree.
(2) Where a user sustains a loss due to a finance company that fails to take measures for identification, in violation of paragraph (1), the finance company shall be liable to indemnify such loss.
[This Article Newly Inserted by Act No. 12384, Jan. 28, 2014]
 Article 2-5 (Interim Measures for Accounts of Users)
(1) Where a finance company deems, through internal checking, that sufficient grounds exist that the account of a user is presumably used for suspicious transactions that may cause telecommunications-based financial fraud (hereinafter referred to as "account for unconscionable transactions"), the finance company shall take measures to postpone or temporarily suspend direct depositing or remittance with respect to all or part of the account of the relevant user (hereinafter referred to as "interim measure").
(2) Where a finance company has taken the interim measure under paragraph (1), it shall notify the relevant user of matters concerning the interim measure without delay and take the measure for identification.
(3) Where a finance company finds, after taking the measure for identification referred to in paragraph (2), that the account of the relevant user is not an account for unconscionable transactions, it shall cancel the interim measure referred to in paragraph (1).
[This Article Newly Inserted by Act No. 12384, Jan. 28, 2014]
 Article 3 (Application for Remedies for Damages)
(1) A victim may apply for the remedy of damages caused by telecommunications-based financial fraud, such as suspension of payment from an account exploited for fraud, to the financial company that manages the account from which the amount of damage has been remitted or transferred or the financial company that manages the account exploited for fraud.
(2) Where the amount of damage has been remitted or transferred to an account exploited for fraud of other financial company, the financial company which has received an application for the remedy of damages pursuant to paragraph (1) shall provide the relevant financial company with necessary information and request the same to suspend payment.
(3) Matters necessary for methods of and procedures for an application for the remedy of damages under paragraph (1) and a request for the suspension of payment under paragraph (2) shall be prescribed by Presidential Decree.
 Article 4 (Suspension of Payments)
(1) In any of the following cases, if a finance company suspects that an account is being exploited for telecommunications-based financial fraud through the confirmation of the details of transactions, etc., it shall immediately take measures to suspend payments on all of such account exploited for fraud: <Amended by Act No. 12384, Jan. 28, 2014>
1. Where there is an application for the compensation for loss under Article 3 (1) or a request for the suspension of payments under Article 3 (2);
2. Where an investigative agency or the Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as “Financial Supervisory Service") provides the finance company with information that an account is suspected of being exploited for fraud;
3. Where an account is assumed to be exploited for fraud after taking the measure to identify the account as an account for unconscionable transactions under Article 2-5 (2);
4. Other cases prescribed by Presidential Decree.
(2) Where a finance company has taken measures to suspend payments pursuant to paragraph (1), it shall notify the following persons of such measures for the suspension of payments without delay: Provided, That where the finance company does not know the whereabouts of the account holder under subparagraph 1, it shall announce publicly the fact concerning measures for the suspension of payments on its Internet homepage, etc.: <Amended by Act No. 12384, Jan. 28, 2014>
1. A holder of the account exploited for fraud, payment from which has been suspended pursuant to paragraph (1) (hereinafter referred to as "account holder");
2. A victim that has applied for the compensation for loss pursuant to Article 3 (1);
3. A finance company that manages the relevant accounts into which money is directly deposited or remitted;
4. The Financial Supervisory Service;
5. Investigative agencies: Provided, That it shall be limited to cases where information is provided under paragraph (1) 2.
(3) When a user sustains a loss due to a finance company failing to suspend payments in violation of paragraph (1) 1 or 2, such finance company shall be liable to indemnify the loss. <Newly Inserted by Act No. 12384, Jan. 28, 2014>
(4) Measures necessary for the procedure for and notification of the suspension of payments under paragraphs (1) and (2) shall be prescribed by Presidential Decree. <Amended by Act No. 112384, Jan. 28, 2014>
 Article 4-2 (Prohibition of Attachment after Suspension of Payment)
(1) No one shall commit any act falling under any of the following, regarding all or part of claim on an account exploited for fraud out of which payment has been suspended under Article 4: Provided, That the same shall not apply where suspension of payment is terminated:
1. Filing a lawsuit such as a lawsuit claiming damages or restitution of unjust enrichment;
2. Requesting attachment, provisional attachment, or provisional disposition under the Civil Execution Act;
3. Initiating procedures to collect delinquent taxes under the National Tax Collection Act;
4. Establishing pledge right.
(2) An account holder or victim may file a lawsuit to affirm non-existent debt or a lawsuit to request a return of unfair profits, notwithstanding the main sentence of paragraph (1). <Newly Inserted by Act No. 15472, Mar. 13, 2018>
[This Article Newly Inserted by Act No. 13928, Jan. 27, 2016]
 Article 5 (Public Announcement of Commencement of Procedure for Extinguishment of Claims)
(1) Where a finance company has taken measures to suspend payments pursuant to Article 4, it shall, without delay, request the Financial Supervisory Service to make a public announcement for the commencement of the procedure for extinguishment of claims (hereinafter referred to as "procedure for extinguishment of claims") of the account holder, as prescribed by Presidential Decree: Provided, That this shall not apply where all or some of the claims held by the account holder fall under any of the following cases: <Amended by Act No. 13928, Jan. 27, 2016; Act No. 15472, Mar. 13, 2018>
1. Where a lawsuit such as a lawsuit claiming damages or reinstitution of unjust enrichment has been filed and pending in court before suspending payment under Article 4;
2. Where an attachment, provisional attachment or provisional disposition order under the Civil Execution Act has been executed before suspending payment under Article 4;
3. Where a procedure to collect delinquent taxes under the National Tax Collection Act has been commenced before suspending payment under Article 4;
4. Where a right of pledge has been established;
5. Where a lawsuit, such as a lawsuit to affirm non-existent debt or to request a return of unfair profits, between an account holder and victim has been filed pursuant to Article 4-2 (2) after suspending payment and pending in court.
(2) Where the Financial Supervisory Service is requested to publicly announce the commencement of the procedure for extinguishment of claims pursuant to paragraph (1), it shall publicly announce the following matters without delay, as prescribed by Presidential Decree: <Amended by Act No. 12384, Jan. 28, 2014>
1. The effect that the procedure for extinguishment of claims has been commenced in connection with telecommunications-based financial fraud;
2. A finance company, its branch and the classification and the account number of a deposit, etc. related to the account exploited for fraud;
3. The name or title of the account holder;
4. The amount of claims subject to extinguishment of claims according to the application for the compensation for loss before the public announcement;
5. The method and procedure for applying for the compensation for loss after commencement of the procedure for extinguishment of claims under Article 6;
6. The method and procedure for the account holder to raise objections under Article 7;
7. The purport of designation as a person subject to restriction of telecommunications-based financial transaction referred to in Article 13-2 (1) and methods and procedures for raising objections;
8. Other matters prescribed by Presidential Decree.
(3) Where the Financial Supervisory Service has publicly announced commencement of the procedure for extinguishment of claims pursuant to paragraph (2), it shall notify the account holder of the commencement of such procedure: Provided, That where the whereabouts of the account holder are unknown, such public announcement under paragraph (2) shall be deemed notice given to the account holder.
 Article 6 (Remedies for Damages after Commencement of Procedure for Extinguishment of Claims)
(1) A person who fails to apply for the remedy of damages before the commencement of the procedure for extinguishment of claims is publicly announced, as a victim of an account exploited for fraud on which the Financial Supervisory Service has made a public announcement of the commencement of the procedure for claims pursuant to Article 5 (2), may apply for the remedy of damages to the relevant financial company within two months of the date of public announcement under Article 5 (2).
(2) Where a person applies for the remedy of damages under paragraph (1), if the relevant financial company deems him/her a victim by confirming the details of the relevant transactions, etc., it shall request the Financial Supervisory Service to publicly announce the commencement of the procedure for extinguishment of claims on the relevant amount of loss.
(3) The Financial Supervisory Service requested to make a public announcement pursuant to paragraph (2) shall announce the relevant matters publicly without delay. In such cases, Article 5 (1) and (2) shall apply mutatis mutandis to a request for a public announcement of the commencement of the procedure for extinguishment of claims and the public announcement thereof.
(4) A financial company and the Financial Supervisory Service shall actively endeavor to provide necessary information, etc., so that a victim who has failed to apply for the remedy of damages before the commencement of the procedure for extinguishment of claims is publicly announced may apply for the remedy of damages pursuant to paragraph (1).
 Article 7 (Raising Objections to Suspension of Payment, etc.)
(1) In any case of the following cases, an account holder may raise an objection to the suspension of payment, restriction of electronic financial transactions, or procedure for extinguishment of claims from the date payment is suspended pursuant to Article 4 (1) or electronic financial transaction is restricted pursuant to Article 13-2 (3) to the date on which two months lapses after the date of public announcement referred to in Article 5 (2). <Amended by Act No. 12384, Jan. 28, 2014; Act No. 15472, Mar. 13, 2018>
1. Where the account holder vindicates the relevant account is not used for fraud;
2. Where the account holder vindicates that he/she received all or part of the claims to be extinguished under Article 9 in return for providing goods or services or acquires by other lawful sources of right with objective materials: Provided, That this shall not apply where he/she is aware of the fact that the relevant account was used for telecommunications-based financial fraud by verifying details of how the account was used for fraud, or transaction behaviors or statement, or where it is deemed that he/she fails to be aware of the fact due to gross negligence.
(2) A finance company shall receive a formal objection under paragraph (1) where the objection falls under any subparagraph of paragraph (1), and shall immediately notify the victim that has applied for the compensation for loss and the Financial Supervisory Service thereof. <Amended by Act No. 15472, Mar. 13, 2018>
(3) Matters necessary for the method and procedure for the account holder to raise objections, etc. shall be prescribed by Presidential Decree.
 Article 8 (Termination of Suspension of Payments, etc.)
(1) In any of the following cases, a finance company and the Financial Supervisory Service shall terminate suspension of payments, procedure for extinguishment of claims, and restriction of electronic financial transactions against the account holder under this Act of all or some of the accounts exploited for fraud: Provided, That they shall not terminate the restriction of electronic financial transactions in cases of falling under subparagraph 1: <Amended by Act No. 12384, Jan. 28, 2014; Act No. 13928, Jan. 27, 2016; Act No. 15472, Mar. 13, 2018>
1. Where an event falling under Article 5 (1) 1 through 4 arises;
1-2. Where a reason falling under Article 5 (1) 5 arises;
2. Where the account holder raises an objection under Article 7 (1);
3. Where the Financial Supervisory Service or an investigative agency acknowledges that the relevant account is not an account exploited for fraud;
4. Where a compensation for the amount of loss has been paid;
5. Other cases prescribed by Presidential Decree.
(2) Notwithstanding paragraph (1), in any of the following cases, no finance company shall terminate the suspension of payments: <Amended by Act No. 15472, Mar. 13, 2018>
1. Where a claim is pending at the court pursuant to Article 5 (1) 1;
1-2. Where a lawsuit is pending in court under Article 5 (1) 5 (limited to loss arising from the telecommunications-based financial fraud from among the amount of money deposited in the relevant account used for fraud);
2. Before two months lapse from the date a victim is notified of the fact that the account holder has raised an objection pursuant to Article 7 (2): Provided, That where the account holder fully explains that the relevant account falls under Article (1) 1 or 2 and his/her explanation is deemed to have sufficient grounds, the suspension of payments may be terminated.
(3) Where a finance company or the Financial Supervisory Service has terminated the suspension of payments and the procedure for extinguishment of claims pursuant to paragraphs (1) and (2), it shall notify the relevant account holder, the victim that has applied for the compensation for loss and the related finance company, of such fact without delay.
 Article 9 (Extinguishment of Claims)
(1) Claims (limited to the amount for which the Financial Supervisory Service has made a public announcement of the commencement of procedure for the extinguishment of claims under Articles 5 (2) and 6 (3)) of the account holder shall be extinguished if two months lapse from the date the commencement of the first procedure for the extinguishment of claims is publicly announced under Article 5 (2).
(2) Where claims of the account holder have been extinguished pursuant to paragraph (1), the Financial Supervisory Service shall notify the relevant account holder, the victim who has applied for the remedy of damages, and the related financial company pursuant to Articles 3 and 6 of the following matters: Provided, That where the Financial Supervisory Service does not know the whereabouts of the account holder, it shall announce the relevant fact publicly on the Internet homepage, etc. of the Financial Supervisory Service and the relevant financial company:
1. The fact that claims of the relevant account holder have been extinguished pursuant to paragraph (1);
2. The amount of claims extinguished;
3. Other matters prescribed by Presidential Decree.
 Article 10 (Determination and Payment of Refund for Loss)
(1) The Financial Supervisory Service shall determine the person who is to receive a refund for loss and the amount thereof within 14 days from the date the relevant claims are extinguished pursuant to Article 9 (1) and then notify the victim who has applied for the remedy of damages and the financial company pursuant to Articles 3 (1) and 6 (1) of the details thereof, and the financial company notified of such details shall pay the victim such refund for loss without delay.
(2) Where the sum of loss exceeds the amount of claims extinguished, the refund for loss under paragraph (1) shall be the amount calculated by multiplying the amount of claims extinguished by the ratio of the amount of loss of each victim to the total amount of loss, and in other cases, it shall be the relevant amount of damage.
(3) The Financial Supervisory Service may request a financial company to submit necessary materials to determine the refund for loss under paragraph (2).
(4) Other necessary matters concerning the determination and payment of the refund for loss, etc. shall be prescribed by Presidential Decree.
 Article 11 (Persons Unentitled to Refund for Loss)
None of the following persons shall be paid a refund for damage:
1. A victim in whose case the amount of loss arising from the relevant telecommunications-based financial fraud has been compensated in full, and his/her successor;
2. A person who has profiteered in connection with the relevant telecommunications-based financial fraud, etc.;
3. A person who has participated in the relevant telecommunications-based financial fraud, etc. as an accomplice or who is the perpetrator of illegality;
4. Other persons prescribed by Presidential Decree.
 Article 12 (Relations with Claims for Damages)
Where a victim has been paid a refund for loss from a financial company according to this Act, a claim for damages caused by the relevant telecommunications-based financial fraud and other rights of claim shall be extinguished within the limits he/she has been paid a refund.
 Article 13 (Claim for Refund of Extinguished Claims)
(1) Where the holder of a title deed whose claims have been extinguished pursuant to Article 9 meets all the following prerequisites, he/she may request the Financial Supervisory Service to make a refund of the claims extinguished: <Amended by Act No. 15472, Mar. 13, 2018>
1. Where the account holder falls under Article 7 (1) 1 or 2;
2. Where there is a justifiable ground why the account holder has failed to raise an objection under Article 7 (1).
(2) The Financial Supervisory Service shall take out an insurance or join a mutual aid to pay a refund under paragraph (1), as prescribed by Presidential Decree.
 Article 13-2 (Restriction of Electronic Financial Transactions on Account Holders of Accounts Exploited for Fraud)
(1) Where the Financial Supervisory Service receives notification of details regarding measures to suspend payment under Article 4 (2), it shall designate the relevant account holder as a person for whom electronic financial transactions are restricted (hereafter referred to as "person subject to restriction of electronic financial transactions" in this Article). <Amended by Act No. 13928, Jan. 27, 2016>
(2) When the Financial Supervisory Service has designated an account holder as a person subject to restriction of electronic financial transactions under paragraph (1), it shall notify the finance company and the account holder thereof without delay: Provided, That where the whereabouts of the account holder are unknown, notice to the account holder shall be deemed made in lieu of the public announcement referred to in Article 5 (2).
(3) No finance company shall settle electronic financial transactions of persons subject to restriction of electronic financial transactions, who is notified of under paragraph (2).
(4) Where a person designated as a person subject to restriction of electronic financial transactions under paragraph (1) is released from such restriction under Article 8 (1), the Financial Supervisory Service shall cancel the designation as being subject to restriction of electronic financial transactions and notify finance companies and the account holder thereof.
[This Article Newly Inserted by Act No. 12384, Jan. 28, 2014]
 Article 13-3 (Cessation etc. of Use of Telephone Number Exploited for Telecommunications-based Financial Fraud)
(1) When the Prosecutor General, the Commissioner General of the National Police Agency, or the FSS Governor ascertains a telephone number exploited for telecommunications-based financial fraud, he/she may request the Minister of Science and ICT to cease provision of telecommunications service for the relevant telephone number. <Amended by Act No. 14839, Jul. 26, 2017>
(2) The user of the telephone number for which provision of telecommunication service is ceased upon request referred to paragraph (1) may file an objection with the agency that has requested the cessation.
(3) Details necessary for the procedures to file an objection under paragraph (2) shall be prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 13928, Jan. 27]
 Article 14 (Fees)
The FSS Governor may collect a fee from a victim who has been paid a refund for loss, as prescribed by Presidential Decree.
 Article 14-2 (Payment of Monetary Rewards)
(1) The Financial Services Commission may have the FSS Governor pay monetary rewards to persons that have reported situations suspected as the account exploited for fraud in telecommunications-based financial fraud to investigative agencies, the Financial Supervisory Service, etc. within budgetary limits.
(2) Matters necessary for the scope of persons eligible for payment of monetary rewards referred to in paragraph (1), criteria and procedure for payment of monetary rewards, etc. shall be determined and published by the Financial Services Commission.
[This Article Newly Inserted by Act No. 12384, Jan. 28, 2014]
 Article 15 (Special Cases concerning Provision, etc. of Account Information)
(1) Notwithstanding Article 4 of the Act on Real Name Financial Transactions and Confidentiality, a finance company and the Financial Supervisory Service may request, provide or publicly announce necessary information pursuant to Articles 3 (2), 4 (2), 5 (1) and (2), 6 (2) through (4), 7 (2), 8 (3), 9 (2), 10 (3), 13-2 (2) and (3), and 16. <Amended by Act No. 12384, Jan. 28, 2014; Act No. 15472, Mar. 13, 2018>
(2) The FSS Governor may request the Minister of the Interior and Safety to provide resident registration records under the Resident Registration Act for notification pursuant to Articles 5 (3), 10 (1) and 13-2 (2). In such case, the Minister of the Interior and Safety shall comply with the request except in extenuating circumstances. <Newly Inserted by Act No. 15472, Mar. 13, 2018>
 Article 15-2 (Penalty Provisions)
(1) Any person that commits any of the followings for the purpose of telecommunications-based financial fraud shall be punished by imprisonment with labor for not more than ten years or by a fine not exceeding 100 million won:
1. Causing other persons to input data or instructions into computers or other information processing units;
2. Inputting data or instructions into computers or other information processing units by using other persons' data he/she acquires.
(2) Attempted crimes referred to in paragraph (1) shall be punished.
(3) Any person who habitually commits offenses referred to in paragraph (1) shall be punished by aggravating the punishment for the offense up to 1/2 of the existing punishment thereon.
[This Article Newly Inserted by Act No. 12384, Jan. 28, 2014]
 Article 16 (Penalty Provisions)
A person who falls under any of the following subparagraphs shall be punished by imprisonment with labor for not more than three years or a fine not exceeding 30 million won:
1. A person who applies for the remedy of damages under Article 3 (1) deceitfully;
2. A person who requests the suspension of payment under Article 3 (2) deceitfully;
3. A person who applies for the remedy of damages under Article 6 (1) deceitfully;
4. A person who raises an objection under Article 7 (1) deceitfully.
 Article 17 (Joint Penalty Provisions)
If the representative of a corporation, or an agent or employee of, or any other person employed by, a corporation or individual commits a violation under Article 15-2 or 16 in relation to the business affairs of the corporation or individual, not only shall the violator be punished, but the corporation or individual shall also be punished by a fine under the relevant Article: Provided, That this shall not apply where the corporation or individual has not been negligent in giving due attention and supervision concerning the relevant duties to prevent such violation. <Amended by Act No. 12384, Jan. 28, 2014>
 Article 18 (Administrative Fines)
(1) Any of the following persons shall be subject to an administrative fine not exceeding ten million won: <Amended by Act No. 12384, Jan. 28, 2014>
1. A finance company that fails to submit or perform an improvement plan referred to in Article 2-2 (2);
2. A finance company that fails to take the measure for identification, in violation of Article 2-4 (1);
3. A finance company that fails to take measures, such as the suspension of payments, in violation of Article 4 (1) 1 or 2;
4. A finance company that fails to request public announcement of the commencement of the procedure for extinguishment of claims, in violation of Article 5 (1) or 6 (2);
5. A finance company that fails to terminate the suspension of payments and the procedure for extinguishment of claims, in violation of Article 8 (1);
6. A finance company that fails to pay a victim a compensation for loss, in violation of Article 10 (1);
7. A finance company that settles electronic financial transactions in violation of Article 13-2 (3).
(2) Any of the following persons shall be subject to an administrative fine not exceeding five million won: <Amended by Act No. 12384, Jan. 28, 2014>
1. A finance company that fails to request the suspension of payments, in violation of Article 3 (2);
2. A finance company that fails to give notice of the relevant measures for suspension of payments in violation of the main sentence of Article 4 (2) other than its subparagraphs;
3. A finance company that fails to notify a victim of a formal objection by the account holder, in violation of Article 7 (2).
(3) The Financial Services Commission shall impose and collect administrative fines under paragraphs (1) and (2), as prescribed by Presidential Decree.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Transitional Measures)
(1) A victim of telecommunications-based financial fraud committed before this Act enters into force shall be deemed a victim under this Act.
(2) A financial company that manages an account exploited for fraud on which the suspension of payment has been imposed in connection with telecommunications-based financial fraud as at the time this Act enters into force shall, without delay, request the Financial Supervisory Service to publicly announce the commencement of the procedure for extinguishment of claims pursuant to Article 5.
ADDENDA <Act No. 12384, Jan. 28, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Responsibilities, etc. of Finance Companies for Prevention of Loss)
The amended provisions of Article 2-4 shall apply from the first case where a user conducts an act referred to in paragraph (1) 1 or 2 of the same Article after this Act enters into force.
Article 3 (Applicability to Restriction of Electronic Financial Transactions on Account Holders of Accounts Exploited for Fraud)
The amended provisions of Article 13-2 shall apply from the holder of the account exploited for fraud for which the first announcement of commencement of procedure for extinguishment of claims is made after this Act enters into force.
Article 4 (Transitional Measures concerning Victims of Act of Feigning Provision, Arrangement and Brokerage of Loans)
(1) Victims that commit any act amounting to feigning the provision, arrangement and brokerage of loans referred to in the amended provisions of the proviso to subparagraph 2 of Article 2, which has taken place before this Act enters into force, shall be deemed victims under this Act.
(2) Any finance company that manages accounts exploited for fraud, payment from which has been suspended with respect to the act of feigning the provision, arrangement and brokerage of loans referred to in the amended provisions of the proviso to subparagraph 2 of Article 2 when this Act enters into force shall request the Financial Supervisory Service to publicly announce the commencement of procedure for extinguishment of claims under Article 5 without delay.
ADDENDA <Act No. 13928, Jan. 27, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Prohibition of Attachment, etc.)
The amended provisions of Article 4-2 shall apply starting with the first case of claim on a deposit in an account exploited for fraud out of which payment is suspended as at the time this Act enters into force.
ADDENDA <Act No. 14242, May 29, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force on December 1, 2016. (Proviso Omitted.)
Articles 2 through 22 Omitted.
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That among Acts amended by Article 5 of the Addenda, the amended provisions of Acts which have been promulgated before this Act enters into force, but the enforcement dates of which have yet to arrive shall enter into force on the enforcement date of the relevant Act.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 15472, Mar. 13, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Raising Objection)
The amended provisions of Article 7 (1) and (2) shall apply beginning with an account used for fraud of which the payment is suspended first as at the time this Act enters into force.