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

Presidential Decree No. 23094, Aug. 22, 2011

Amended by Presidential Decree No. 23488, Jan. 6, 2012

Presidential Decree No. 25528, Jul. 28, 2014

Presidential Decree No. 25532, Aug. 6, 2014

Presidential Decree No. 27397, Jul. 26, 2016

Presidential Decree No. 28218, Jul. 26, 2017

 Article 1 (Purpose)
The purpose of this Decree is to prescribe matters delegated by the Special Act on the Prevention of Loss Caused by Telecommunications-Based Financial Fraud and Refund for Loss and matters necessary for the enforcement thereof. <Amended by Presidential Decree No. 25528, Jul. 28, 2014>
 Article 2 (Scope of Finance Company)
The term “institutions prescribed by Presidential Decree” specified in subparagraph 2 (m) of Article 2 of the Special Act on the Prevention of Loss Caused by Telecommunications-Based Financial Fraud and Refund for Loss (hereinafter referred to as the “Act”) means the following institutions: <Amended by Presidential Decree No. 25528, Jul. 28, 2014>
1. Livestock industry cooperatives pursuant to the Agricultural Cooperatives Act;
2. Forestry cooperatives and central associations therof pursuant to the Forestry Cooperatives Act.
 Article 2-2 (Business of Financial Services Commission Related to Telecommunications-Based Financial Fraud)
The term “countermeasures prescribed by Presidential Decree to respond to telecommunications-based financial fraud” specified in Article 2-2 (1) 3 of the Act means the following measures:
1. Formulation and implementation of countermeasures to prevent or minimize loss incurred by telecommunications-based financial fraud;
2. Building cooperation systems for information-sharing, etc. between the ministries and institutions dealing with telecommunications-based fraud.
[This Article Newly Inserted by Presidential Decree No. 25528, Jul. 28, 2014]
 Article 2-3 (Method, etc. of Identification by Finance Company)
(1) The measures for identification specified in the main sentence of Article 2-4 (1) of the Act (hereinafter referred to as “identification measures”) shall be taken using any of the following methods:
1. Using a telephone (including a cellular phone) of a user registered to a finance company;
2. Face-to-face verification of the identity of a user;
3. Other measures deemed appropriate and equivalent to the level specified in subparagraph 1 for identification and announced by the Financial Services Commission.
(2) Where a finance company takes identification measures under paragraph (1), it shall inform a user that the purpose of identification is to prevent any loss that may be caused by telecommunications-based financial fraud, along with the details of financial transactions for applications or withdrawals pursuant to the subparagraphs of Article 2-4 (1).
(3) The term “cases prescribed by Presidential Decree” specified in the proviso to Article 2-4 (1) means any the following cases: <Amended by Presidential Decree No. 27397, Jul. 26, 2016>
1. Where a user that is a corporation does not want to take identification measures;
2. Where a finance company confirms that a user resides or stays overseas by inquiring into departure information pursuant to the agreement of the user or receiving a certificate of immigration facts from the user;
3. Where it is impossible to take identification measures due to an act of God or other equivalent grounds.
(4) The term “financial products prescribed by Presidential Decree” means the following financial products:
1. Savings insurance and mutual aid (referring to savings insurance and mutual aid that the sum of their grants provided while a beneficiary is alive surpasses the already-paid amount of insurance or mutual-aid);
2. Other financial products determined and announced by the Financial Services Commission considering the number, amount, etc. of losses caused by telecommunications-based financial fraud for each financial product.
[This Article Newly Inserted by Presidential Decree No. 25528, Jul. 28, 2014]
 Article 3 (Application for Remedy for Loss)
(1) A victim who intends to apply for a remedy for loss pursuant to Article 3 (1) of the Act shall submit an application for a remedy specified in attached Form 1, attached with a copy of the victim’s identification card, to the relevant finance company: Provided, That the victim may apply by phone or verbal request where it is urgent or in extenuating circumstances.
(2) Upon receipt of an application pursuant to the proviso to paragraph (1), a finance company shall verify the name, date of birth, contact number, domicile, details of loss, grounds for an application, etc. of a victim. In such cases, a victim who applies for a remedy shall submit the application documents specified in the main sentence of paragraph (1) to the relevant finance company within three business days from the date he/she applies therefor. <Amended by Presidential Decree No. 25528, Jul. 28, 2014; Presidential Decree No. 27397, Jul. 26, 2016>
(3) Where a finance company fixes a period of 14 additional days after the period specified in the latter part of paragraph (2) elapses for a victim to submit the documents but the victim fails to submit the application documents specified in the main sentence of paragraph (1), the application filed pursuant to paragraph (1) shall be deemed null. In such cases, where the finance company has informed the victim of the former part but the victim has failed to submit the application documents specified in the main sentence of paragraph (1) within 14 days, the finance company shall notify the victim that his/her application filed under the proviso to paragraph (1) has become null. <Newly Inserted by Presidential Decree No. 27397, Jul. 26, 2016>
(4) Upon receipt of an application under paragraph (1), a finance company may require a victim to submit relevant documents including a confirmation document of loss report issued by an investigation agency, where it is deemed necessary. <Amended by Presidential Decree No. 27397, Jul. 26, 2016>
 Article 4 (Request to Suspend Payment)
(1) A finance company that intends to request suspension of payment under Article 3 (2) of the Act shall submit the application for suspension of payment specified in the attached Form 2, attached with a copy of the application documents of a victim pursuant to the main sentence of Article 3 (1), to a finance company managing the accounts exploited for fraud.
(2) Notwithstanding paragraph (1), where it is urgent or extenuating circumstances exist, a finance company applying for suspension of payment may apply therefor via the telecommunications system between finance companies. In such cases, the finance company that has applied for suspension of payment shall submit the required documents under paragraph (1) to the relevant finance company within three business days from the date of application. <Amended by Presidential Decree No. 25528, Jul. 28, 2014>
(3) A finance company requested for suspension of payment under paragraph (1) of the former part of paragraph (2) may require the relevant finance company to submit the documents necessary for a remedy for loss or for suspension of payment, where it is deemed necessary.
 Article 5 (Procedure and Notification of Suspension of Payment)
(1) Where a finance company takes a measure to suspend payment on the account exploited for fraud under Article 4 (1) of the Act, the company shall enter the fact in an electronic ledger of the relevant account.
(2) Matters for notification and public announcement pursuant to Article 4 (2) of the Act shall be as specified in the following subparagraphs. In such cases, a public announcement shall be made at least for 14 days:
1. Matters regarding the date, grounds, amount, etc. of suspension of payment;
2. Matters regarding the account exploited for fraud including the store, types of saving accounts, account numbers, etc. related to suspension of payment;
3. Matters regarding the finance company that applied for suspension of payment.
(3) Deleted. <by Presidential Decree No. 25528, Jul. 28, 2014>
 Article 6 (Public Announcement on Commencement of Procedure for Extinguishment of Claims)
(1) Where a finance company requests for a public announcement on the commencement of a procedure for extinguishment of claims under the main sentence of Article 5 (1) of the Act (hereinafter referred to as “procedure for extinguishment of claims”), the company shall submit the form of request for commencement of a procedure for extinguishment of claims specified in the attached Form 3, attached with the following documents, to the Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as the “Financial Supervisory Service”): <Amended by Presidential Decree No. 25528, Jul. 28, 2014>
1. A copy of an application for a remedy for loss pursuant to the main sentence of Article 3 (1);
2. A copy of an application for suspension of payment pursuant to Article 4 (1);
3. A copy of documents related to the notification or public announcement pursuant to Article 5 (2).
(2) Upon receipt of a request for a public announcement pursuant to paragraph (1), the Financial Supervisory Service shall publicly announce the commencement of a procedure for extinguishment of claims on its website for two months.
 Article 7 (Raising Objection to Suspension of Payment, etc.)
Where a holder of an account exploited for fraud raises an objection under Article 7 (1) of the Act, he/she shall submit an application for an objection specified in the attached Form 4, attached with the following documents, to a finance company managing the account exploited for fraud:
1. Documents proving the relevant account has not been exploited for fraud;
2. A copy of an identification card of the holder of the account exploited for fraud.
 Article 8 (Termination of Suspension of Payment, etc.)
(1) The term “cases prescribed by Presidential Decree” specified in Article 8 (1) 5 of the Act means any of the following cases: <Amended by Presidential Decree No. 27397, Jul. 26, 2016>
1. Where all of the victims who applied for a remedy for loss withdraw the application;
2. Where a holder of an account exploited for fraud verifies to an investigation agency that any of the following facts have not been committed related to the account exploited for fraud: Provided, That among the deposit in the account exploited for fraud, the amount deemed as the loss caused by telecommunications-based financial fraud shall be excluded from suspension of payment, etc. pursuant to Article 8 (1) of the Act:
(a) Conduct of an act falling under the subparagraphs of Article 15-2 (1) of the Act;
(2) A victim who intends to withdraw an application for a remedy for loss pursuant to subparagraph 1 of Article 1 shall submit the application for withdrawal of a remedy for loss specified in attached Form 5, attached with a copy of his/her identification card, to the finance company to which he/she applied for a remedy. <Amended by Presidential Decree No. 27397, Jul. 26, 2016>
(3) Upon receipt of an application for withdrawal of a remedy pursuant to paragraph (2), a finance company shall inform the finance company and Financial Supervisory Service that have taken measures for suspension of payment or restriction on electronic financial transactions of such application without delay. <Amended by Presidential Decree No. 25528, Jul. 28, 2014>
(4) Where a finance company terminates suspension of payment in the cases falling under the subparagraphs of Article 1, the company shall notify the Financial Supervisory Service of the termination without delay. <Amended by Presidential Decree No. 27397, Jul. 26, 2016>
 Article 9 (Payment, etc. of Refunds for Loss)
(1) Where a finance company pays a refund for loss pursuant to Article 10 (1) of the Act, the company shall transfer the refund to the account designated by a victim.
(2) A finance company that has paid a refund for loss pursuant to paragraph (1) shall inform the Financial Supervisory Service of the relevant payment within three days from the date of payment.
 Article 10 (Subscription to Insurance, etc. to Pay Refund)
Where the Financial Supervisory Service subscribes to insurance or mutual aid under Article 13 (2) of the Act, it shall subscribe to an insurance or mutual aid that guarantees the payment limit surpassing the amount of extinguished claims.
 Article 10-2 (Procedure, etc. for Raising Objection)
(1) Where a user whose provision of telecommunications service is suspended under the request specified in Article 13-3 (1) of the Act intends to raise an objection pursuant to paragraph (2) of the same Article, the user shall submit the documents filled with the following information to the institutions that requested the suspension of provision of telecommunications service pursuant to paragraph (1) of the same Article (hereinafter referred to as “institution that requested for suspension of provision” in this Article) within 30 days from the date the provision of telecommunications services is suspended:
1. The title or name, domicile, and contact information of the person who raised an objection;
2. The grounds for raising an objection;
3. The date on which the provision of telecommunications services is suspended.
(2) Upon receipt of an objection pursuant to paragraph (1), the institution that requested suspension of provision shall make a determination on the objection and notify the person who raised the objection in writing, within 15 days from the date of receipt of an objection: Provided, That where it is impossible to make a decision within 15 days due to extenuating circumstances, the period may be extended by an additional 15 days, and the grounds for and period of an extension shall be notified to the person who raised an objection.
(3) The institution that requested for suspension of provision may request for supplements where the documents submitted under paragraph (1) have deficits or where they must verify additional information. In such case, the period necessary for the supplementation shall not be counted in the period specified in the main sentence of Article 2.
(4) Where the institution that requested for suspension of provision deems that an objection raised under Article 13-3 (2) of the Act is reasonable, it shall request the Minister of Science and ICT to withdraw the suspension of provision of telecommunications service without delay. <Amended by Presidential Decree No. 28218, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 27397, Jul. 26, 2016]
 Article 11 (Fees)
(1) The fees specified in Article 14 of the Act shall be imposed within the scope of the actual expenses in making the notification pursuant to Articles 5 (3), 9 (2), 10 (1), and 13-2 (2) of the Act: Provided, That the fees may not be imposed considering the scale of the refund for loss and the ability of the victim to bear a burden, etc. <Amended by Presidential Decree No. 25528, Jul. 28, 2014>
(2) The fees pursuant to paragraph (1) may be paid by using such methods as cash, electronic currencies, electronic payment, etc.
 Article 11-2 (Handling of Sensitive Information and Personally Identifiable Information)
(1) Where it is inevitable to perform the following affairs, the Financial Supervisory Service may handle information related to the criminal history record specified in subparagraph 2 of Article 18 of the Enforcement Decree of the Personal Information Protection Act; resident registration numbers specified in the subparagraph 1, 2, or 4 of Article 19 of the same Decree; and information including passport numbers and alien registration numbers: <Amended by Presidential Decree No. 25528, Jul. 28, 2014; Presidential Decree No. 25532, Aug. 6, 2014>
1. Affairs related to public announcement on the commencement of a procedure for extinguishment of claims and extinguishment of claims pursuant to Articles 5 and 9 of the Act;
2. Affairs related to public announcement on the commencement of a procedure for extinguishment of claims pursuant to Article 6 of the Act;
3. Affairs related to raising an objection to suspension of payment, restriction on electronic financial transactions, and a procedure for extinguishment of claims and termination pursuant to Articles 7 and 8 of the Act;
4. Affairs related to decisions on and payment of refunds for loss pursuant to Article 10 of the Act;
5. Affairs related to persons not eligible for a refund for loss pursuant to Article 11 of the Act;
6. Affairs related to claims for a refund of extinguished claims pursuant to Article 13;
7. Affairs related to restriction on electronic financial transactions of a holder of an account exploited for fraud, pursuant to Article 13-2 of the Act;
8. Affairs related to payment of monetary rewards pursuant to Article 14-2 of the Act.
(2) Where it is inevitable to perform affairs related to identification measures pursuant to Article 2-4 of the Act, a finance company may handle information including resident registration numbers, passport numbers, or alien registration numbers specified in subparagraph 1, 2, or 4 of Article 19 of the Enforcement Decree of the Personal Information Protection Act. <Newly Inserted by Presidential Decree No. 25532, Aug. 6, 2014>
[This Article Newly Amened by Presidential Decree No. 23488, Jan. 6, 2012]
 Article 12 (Standard for Imposing Administrative Fines)
The standards for imposing administrative fines pursuant to Article 18 (1) and (2) of the Act shall be prescribed in the attached Table.
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on September 30, 2011.
Article 2 (Transitional Measures concerning Remedy for Loss or Suspension of Payment)
The ongoing application for a remedy for loss by a victim or request for suspension of payment by a finance company that was filed pursuant to the former provisions as at the time this Decree enters into force shall be construed as an application for a remedy for loss or request for suspension of payment pursuant to Article 3 or 4.
ADDENDA <Presidential Decree No. 23488, Jan. 6, 2012>
Article 1 (Enforcement Date)
This Decree enters into force on the date of its promulgation. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Presidential Decree No. 25528, Jul. 28, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 29, 2014.
Article 2 (Applicability to Application for Remedy for Loss)
The amended provisions of the latter part of Article 3 (2) shall also apply to cases where an application for a remedy for loss was filed pursuant to the proviso to Article 3 (1) before this Decree enters into force and where the date this Decree enters into force falls within three business days from the date of such application.
Article 3 (Applicability to Application for Suspension of Payment)
The amended provisions of the latter part of Article 4 (2) shall also apply to cases where an application for suspension of payment was filed pursuant to the main sentence of the same paragraph before this Decree enters into force and where the date this Decree enters into force falls within three business days from the date of such application.
ADDENDUM <Presidential Decree No. 25532, Aug. 6, 2014>
This Decree shall enter into force on August 7, 2014.
ADDENDA <Presidential Decree No. 27397, Jul. 26, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 28, 2016.
Article 2 (Applicability to Legal Fiction as not Applying for Remedy for Loss)
The amended provisions of Article 3 (3) shall also apply to a person who applied for a remedy for loss by telephone or verbal request pursuant to the proviso to paragraph (1) of the same Article before this Decree enters into force.
ADDENDA <Presidential Decree No. 28218, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Decree enters into force on the date of its promulgation.
Articles 2 and 3 Omitted.