1,000 bank accounts opened in names of deceased people

Two years ago, an individual was apprehended for obtaining a loan of 30 million won ($22,413) online by using his deceased brother’s identity. A court in Seoul convicted him of fraud, sentencing him to four months in prison with a one-year suspended sentence.

Including this incident, the Financial Supervisory Service (FSS) revealed on Sunday that 1,067 bank accounts have been created fraudulently and 49 loans issued in the names of deceased individuals over the last five years. Additionally, there have been 6,698 cases of unauthorized financial activities, such as changes to account passwords or digital certificates.

The findings were uncovered during the FSS’ routine inspections of certain banks, leading to a wider investigation across all banking institutions. It was discovered that these fraudulent transactions took place mostly after the time of a customer’s death and before the bank was notified of the death, utilizing nonface-to-face methods such as mobile banking.

The bank’s current procedures for remote identity verification are not robust enough to guarantee the accurate identification of account holders. This allows individuals in possession of a deceased person’s ID card, mobile phone and password to carry out financial transactions.

In some instances, heirs may bypass the complex and time-consuming legal inheritance process by the unauthorized use of their deceased parent’s financial information, thereby risking legal consequences.

For example, one individual faced legal repercussions after transferring 7.5 million won from his deceased mother’s bank account to his own without the consent of his sibling, who was also entitled to a share of the inheritance. This sibling reported this action to the authorities, resulting in a 3 million won fine for the individual on charges of computer fraud and embezzlement.

The FSS has issued a recommendation that deaths should be reported to local government authorities within one month of occurring, with financial institutions being notified as well. Following such notifications, these financial institutions are advised to freeze any withdrawals from accounts registered in the name of the deceased. Currently, there is no legal deadline for reporting a death to the financial entities.