Reason for the Proposal and Main Contents

The current Act requires all financial transactions with financial companies and certain other entities to be conducted in the real name of the parties concerned. As such, corporations should conduct financial transactions in their corporate name, whereas organizations that have not been issued a business license (tax-payer registration certificate), but which have instead been assigned a tax-payer number (hereinafter referred to as “entities considered to be corporations”), should conduct their financial transactions under the name of their organization and the tax-payer number indicated on the tax-payer number assignment document.

However, as no restrictions are applied to the names used by a corporation or an organization considered to be a corporation, confusion has often arisen as to whether a party to a financial transaction is a natural person, a corporation, or an organization considered to be a corporation. There have even been cases in which a bank account was fraudulently held in the name of an organization that deliberately reads the same as a natural person's name in order to commit acts of fraud, such as cheating Jeonse [deposit-based lease contract] lease holders.

Therefore, the proposed revision aims to increase the transparency of financial transactions conducted in the name of a corporation or an organization considered to be a corporation by requiring those concerned to clearly indicate whether the party to a financial transaction is a corporation or an organization regarded as a corporation, along with their real name, so as to prevent any misunderstanding about their true identity (Newly established provision at the end of Article 3 (1) of the draft).