Cash Transactions to be under Government Surveillance

The government and the Uri Party are promoting the implementation of a new system in which any large-amount cash transaction should be reported to the authorities, and Korea`s five major economic groups have expressed concerns against it for the economic disruption it can cause.

The Korea Chamber of Commerce and Industry reported on September 15 that a petition against the implementation of obligatory large cash transaction report system has been submitted to the National Assembly and the Ministry of Finance and Economy, which was formed jointly with other business associations including the Federation of Korean Industries, Korea International Trade Association, Korea Federation of Small and Medium Businesses, and others.

The five major economic associations indicated on the petition that "Although the system has been designed to prevent illegal transaction of funds, the system may cause other side effects if the criteria of the reported price is set at an inappropriate level, starting with slowed financial transactions, invasion of privacy, emergence of illicit transactions, and more."

The petition, in particular, asserted, "If the criteria is set at 20 million won, everyday transactions done by citizens and business such as leasing or purchasing a house or any commercial settlements will become the subject of supervision against money-laundering," and that, "Such a situation will slow down the real economy and have a negative impact on economic recovery." Also, it expressed concerns about how "it will be an inefficient system in which the authorities will have to keep surveillance over every detail of any transaction made only to catch one or two violations," and how "it will burden the financial sector with the high cost of maintaining the system which will have to be compensated through increased service charges." The economic associations` suggestion that will minimize the side effects is to keep the framework of the current system in which only the transactions in suspicion, amounts over 20 million won, become the subjects of obligatory reports, and those over 100 million won, whether they are suspected to be illegal or not, should be the starting limit for transactions to be reported and to gradually lower the limit.

Tae-Han Kim freewill@donga.com