Gangneung Police Arrest 13 Over Illegal Private Loan Brokerage
A registered loan brokerage firm funneled the personal data of approximately 1,500 borrowers to illegal private lenders, facilitating roughly 22 billion won in high-interest loans, Gangneung Police reported. The scheme subjected vulnerable borrowers to annual interest rates exceeding 207%, more than ten times South Korea’s legal limit.
Police arrested 13 individuals involved in the operation on charges of violating the Loan Business Act, with one interest collector placed in detention, according to the Gangneung Police Station. Investigators seized 1.26 billion won in cash suspected of being criminal proceeds and applied for pre-indictment preservation on an additional 1.9 billion won in assets.
Inside the High-Interest Scheme
The brokerage operation, run by a man in his 30s identified only as A, collected loan applicants’ personal information in Seoul and surrounding areas before transferring the data to unlicensed lenders. The primary firm secured approximately 2 billion won in brokerage fees for connecting desperate borrowers to illicit capital.
One victim who borrowed 200 million won in September 2024 agreed to an annualized interest rate of 207%. After receiving 189.2 million won—following an upfront interest deduction of 10.8 million won—the borrower repaid the principal alongside roughly 47 million won in interest by November of that year. The total interest payment reached 57.8 million won, far exceeding the roughly 5.9 million won that would have accrued under the legal annual rate cap of 20%.
To evade law enforcement, the syndicate used aliases and burner phones for communication. Criminal proceeds were transported in cash via motorcycle courier services to conceal the financial trail from investigators.
Investigation and Borrower Support Measures
The arrests follow an eight-month police investigation that tracked the network’s financial flows and communications. Two suspects, including the detained interest collector, were transferred to prosecutors last year, while the remaining 11 suspects were referred to authorities.
Law enforcement applied regulations governing the illegal distribution of personal information, which took effect in July of last year. Authorities warned that telephone numbers, identity card photos, and acquaintance contacts handed over to illegal lenders frequently lead to secondary crimes, including loan scams and abusive debt collection.
Police have connected identified victims with the One-Stop Comprehensive Support Center for Illegal Private Financing and the Credit Counseling and Recovery Service to assist with debt restructuring and financial rehabilitation.