Surprise launch of the real-name financial transaction system

Home > Opinion > Meanwhile

Surprise launch of the real-name financial transaction system

Published: 12 Aug. 2025, 00:06

Audio report: written by reporters, read by AI

Roh Jung-tae

The author is a writer and a senior fellow at the Institute for Social and Economic Research.

“Dear fellow citizens, we are finally implementing the real-name financial transaction system. From this moment on, all financial transactions will be conducted under real names only.”

With those words at 7:45 p.m. on Aug. 12, 1993, President Kim Young-sam (1929-2015) stunned the country by announcing an unanticipated emergency statement before the press. He declared Emergency Financial Decree No. 16, titled “Emergency Financial Decree on Real-Name Financial Transactions and Confidentiality.”

In June 1985, Kim Young-sam, then former president of the New Korea Democratic Party, right, and Kim Dae-jung, center, co-chair of the opposition Coalition for Democratic Constitution, met to discuss a response to a government statement. Both later served as president after Korea’s democratization. [JOONGANG ILBO]

Finance rests on credit, and credit cannot exist without transparency. In that sense, a “real-name financial transaction system” is tautological. Yet Korea had long debated its introduction. The roots lay partly in lingering traditions from an agrarian society, but the deeper cause was the May 16 military coup. On July 29, 1961, the military government enacted the “Act on the Guarantee of Secrecy of Savings and Deposits,” which legalized non–real-name transactions using borrowed or false names under the pretext of legitimizing illicit funds.

Seen charitably, this brought “black money” into the banking system, fueling industrialization. In reality, it allowed slush funds, political money and speculative real estate capital to be laundered through banks under the protection of law. Both ruling and opposition parties enjoyed the benefits and resisted change. Even after democratization in 1987, and despite the opposition’s legislative majority, the system remained untouched.

Upon taking office, Kim Young-sam declared a break from military rule and prepared an implementation plan in secret. He then abruptly announced the policy and requested an extraordinary session of the National Assembly. The real-name financial transaction system was more than an economic measure — it was a first step toward Korea’s substantive democratization and economic reform.

Lee Choon‑suak, chair of the National Assembly’s Legislation and Judiciary Committee and a member of the Democratic Party, is leaving the plenary session hall on Aug. 5 amid growing allegations of stock trades conducted under another person’s name. He responded to questions from reporters as he exited. [YONHAP]

32 years later, non–real-name transactions have not been eradicated. On Aug. 11, police raided the office of Rep. Lee Choon-suak, who recently left the Democratic Party over allegations that he conducted stock trades using an aide’s account. A thorough investigation is needed.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom staff.