Authors: Wonhyuk Lim; Christine Joo
To combat issues of corruption and tax evastion, starting in the early 1980s, policymakers in the Republic of Korea began to attempt to introduce a real-name financial transaction system (RNFTS). An RNFTS seeks to enhance financial transparency by banning all financial transactions that are made under borrowed names or pseudonyms or anonymously. Within such a system, only the verified, real name of an individual or legal entity can be used for financial transactions. By improving the integrity and transparency of a country’s financial system, an RNFTS aims to promote fair taxation, reduce corruption, and provide reliable data necessary for other reforms. However, introducing an RNFTS requires a substantial amount of resources to set up data infrastructure and safeguard privacy. Such policies also face resistance from parties that have vested interests in keeping financial transactions secret
To enhance transparency in financial transactions in order to curb corruption and tax evasion, the Korean government introduced the RNFTS. This policy ultimately took three separate attempts to implement as the Korean government strove to address its technical and political challenges. This case study, and a delivery note adapted by Christine Joo from the original case study, examines how policymakers addressed these challenges and ultimately instituted the RNFTS.