Police Discover Illegal Mongolian Banks

The police have discovered illegal branch offices of Mongolian commercial banks in Seoul.

This is the first time that a foreign commercial bank has been caught illegally establishing a branch office in Korea.

A total of five banks were caught, including Anod Bank, Credit Bank, Golomt Bank, and Mongol Shuudan Bank, which are all well known in Mongolia.

On November 9, the Seoul Jungbu Police Station said that it indicted branch managers of Seoul branch offices from four banks, including “A” (36. female), a Seoul branch office of Anod Bank, without detention for violating the Banking Act and Foreign Exchange Transactions Act. The police are also going after the whereabouts of “B” (32), a Seoul branch manager of Mongol Shuudan Bank who ran away.

According to the police, Anod Bank which is based in Ulaan Bator, the capital of Mongolia, opened its Seoul branch after renting a 22-pyeong office in the New Geumho Town building in what is known as “Mongol Town” in Gwanghi-dong, Jung-gu, Seoul in April 2003.

Anod Bank attracted $5 million (5 billion won) from 1,000 Mongolians staying in Korea and is suspected of sending the money to its head office through foreign currency accounts of Korean commercial banks.

Anod Bank is also charged with sending money to a Mongolian recipient after receiving $6 million (6 billion won) from 3,000 Mongolians and Koreans.

The police estimate that the five banks have so far attracted around 12 billion won from some 4,200 people, and that they have remitted 21.5 billion won to Mongolia at the request of 9,000 people.

A police official said, “As a foreign bank needs to bring in at least three billion won to open a branch in Korea, it seems that these banks, which have little capital stock, established branch offices in Korea without the authorization of the Financial Supervisory Commission (FSC).”

Jae-Myoung Lee egija@donga.com