53 arrested for illegal loan brokering that skimmed 10-15% from borrowers shut out of formal credit

Police arrested a group that brokered loans without a registered money-lending license and collected fees from borrowers.

Seoul's Gwanak Police Station said Wednesday it had arrested 53 people — including the head of an unregistered loan brokerage — who intermediated 46.6 billion won ($34.8 million) in loans for 3,481 borrowers and pocketed 4.97 billion won in fees. The suspects were sent to prosecutors on Oct. 22.

The group is charged with brokering government-backed loans under the guise of financial consulting for people unable to obtain credit from mainstream financial institutions, then collecting fees of 10 to 15 percent of each loan amount. The scheme ran from March 2024 through May this year.

Police launched the investigation in April after receiving a tip, conducting field inquiries to build the case. Officers then carried out searches and seizures at the illegal private lending firm's offices and the financial accounts used in the scheme, confirming records of fee deposits and identifying those involved.

Police also booked additional suspects who, during the loan brokerage process, referred the lowest-credit borrowers to two law offices for personal rehabilitation and bankruptcy proceedings and received 78.75 million won in return. Those individuals were charged with violating the Attorney-at-Law Act and sent to prosecutors along with the others.

Police urged anyone seeking government-backed financial support loans to go through official financial institutions such as banks for guidance. They said anyone approached by an unverified individual offering loan products and demanding fees — or anyone who has suffered harm from illegal activity — should report it immediately by calling 112.

"Illegal private lending crimes continue to occur amid difficult economic conditions, including high interest rates and a delayed economic recovery," a police official said. "We will step up special enforcement operations and take the lead in eradicating illegal private lending."