Fewer fraud cases but bigger amounts recovered, anti-corruption body finds

The number of public subsidy fraud cases being clawed back is falling, but the total amount recovered keeps rising — a trend suggesting fraudulent claims are shifting from many small-scale violations to fewer but far larger ones.

The Anti-Corruption and Civil Rights Commission said Thursday it had analyzed about 522,000 cases of public finance fraud recovery and related dispositions by public institutions over the three years from 2023 to 2025. The analysis covered 311 institutions in total, including 51 central government agencies, 243 local administrative bodies and 17 metropolitan and provincial offices of education.

The number of fraud recovery dispositions fell from 210,322 in 2023 to 141,781 in 2025 — a drop of 68,541 cases, or 32.6 percent. Over the same period, however, the total amount recovered rose 17 percent, from 110.8 billion won ($80 million) to 129.6 billion won, an increase of 18.8 billion won. The average recovery per case jumped 73 percent as a result, from 530,000 won to 910,000 won.

A comprehensive fraud risk assessment found that livelihood benefit payments carried the highest risk of any single program. The risk index was calculated by normalizing four factors: number of recovery cases (weighted at 25 percent), total amount recovered (25 percent), per-case amount (20 percent) and degree of intent (30 percent). By region, the Seoul and Gyeonggi Province metropolitan area showed relatively higher fraud risk than other parts of the country.

To better reflect risk characteristics in policy, the commission grouped fraudulent claims into three categories: "intentional," covering deliberate false claims; "large-scale," covering cases with high total recovery amounts; and "erroneous payment," covering repeated overpayments.

Among high-risk intentional fraud programs, youth employment support benefit payments ranked first. A common scheme involved registering people who had not actually worked as employees, filing false reports to obtain employment insurance eligibility and then collecting youth job-creation subsidies.

In the large-scale category, livelihood benefits, housing benefits and social insurance premium support recorded the largest recovery volumes. The programs that saw the fastest growth in recovery amounts over the past three years were eco-friendly vehicle subsidies and clean-workplace establishment support grants. In the clean-workplace program, confirmed fraud cases included the unauthorized sale of subsidized equipment and the kickback of a portion of payments from suppliers.

Of all recovery cases, 73.5 percent were classified as erroneous payments rather than intentional fraud. Most involved the belated discovery of changes in a recipient's income, assets or household composition, which triggered recovery of livelihood and housing benefits already paid out. Social insurance premium support, livelihood benefits and housing benefits were identified as the programs most prone to repeated erroneous payments.

Breaking down results by institution type, central government agencies had the highest share of recoveries attributable to erroneous payments, at 52.2 percent of their total. Metropolitan governments recorded the highest share from misuse of funds for unintended purposes, at 49.6 percent. Basic local governments recovered the largest total amount among all institution types — 183.6 billion won over the three years. Metropolitan and provincial offices of education had the smallest overall recovery volume at 10.9 billion won, but their average recovery per case was the highest of the four institution types at 2.27 million won.

The time between a public finance payment and a recovery disposition was longest at metropolitan and provincial offices of education, averaging 23.7 months, followed by central government agencies at 16.0 months, metropolitan governments at 13.6 months and basic local governments at 10.2 months.

Based on the findings, the commission plans to prioritize sectors that saw the sharpest rise in recovery volumes over the past three years and run a concentrated subsidy fraud reporting period in October.

Han Sam-seok, secretary general of the commission, said fraud patterns vary widely depending on the institution and program involved, differing in scale, intent and type. "We will use the risk characteristics and vulnerabilities identified in this analysis to inform and improve related policies, so that taxpayers' money is not wasted and goes where it is truly needed," Han said.