Korea’s Suspicious Account Transaction Freeze System: What Scam Victims and Account Holders Need to Know
Since June 30, 2026, financial institutions in Korea have been able to promptly restrict transactions involving accounts suspected of being used in emerging phishing schemes, including no-show scams and romance scams.
Victims should report the incident before the funds are transferred elsewhere. At the same time, an account holder whose account has been frozen despite receiving legitimate payment must be prepared to prove the underlying transaction with objective evidence.
What Is the Suspicious Account Transaction Freeze System?
Korea’s 「Special Act on the Prevention of Loss Caused by Telecommunications-Based Financial Fraud and Refund for Losses」 provides procedures for freezing accounts used in voice phishing schemes and refunding eligible victims.
However, fraudulent schemes disguised as ordinary transactions involving goods or services have generally fallen outside the scope of the conventional voice phishing refund framework. This created practical difficulties in promptly restricting accounts used in scams presented as product purchases, investments, or service transactions.
To address this issue, the Financial Services Commission, the Korea Financial Intelligence Unit, and the National Police Agency introduced a system on June 30, 2026, allowing suspicious accounts linked to emerging phishing schemes to be temporarily restricted through existing customer due diligence procedures.
Once an account is identified as potentially connected to such a scheme, the financial institution may classify the account holder as subject to enhanced customer due diligence under the 「Act on Reporting and Using Specified Financial Transaction Information」 and restrict incoming and outgoing transactions.
What Types of Scams May Be Covered?
The system may apply to various forms of emerging phishing fraud, including the following.
▪️No-Show Scams
A fraudster impersonates a public institution or corporate buyer, promises a large order, and instructs the victim to purchase goods or materials from a designated supplier.
▪️Romance Scams
A fraudster builds a personal relationship through social media or messaging applications and later requests money for investments, business expenses, customs charges, medical costs, or similar reasons.
▪️Investment Scams
A fraudster promises profits from stocks, virtual assets, overseas futures, or other investments, receives funds from the victim, and then blocks withdrawals or demands additional payments.
However, an account is not automatically frozen simply because money was transferred and a dispute later arose.
Authorities must distinguish between an ordinary contractual dispute and conduct involving deception through telecommunications and circumstances indicating possible fraud. Financial institutions and the police may review transaction records, communications, the method used by the suspected offender, and whether the promised goods or services were actually provided.
How Does the Transaction Freeze Process Work?
1. Victim Report and Temporary Action by the Financial Institution
A person who suspects that they have been targeted by an emerging phishing scam should immediately report the matter by calling 112 or visiting a nearby police station in Korea.
A financial institution may take temporary action when it identifies a suspicious transaction through its fraud detection system or receives a report from the victim or the police.
The account may therefore be temporarily restricted before the authorities have conclusively determined whether the case involves conventional voice phishing or another form of emerging phishing fraud.
2. Police Review of the Fraud Type
The National Police Agency’s Integrated Response Center for Telecommunications Financial Fraud reviews whether the transaction involved a genuine sale of goods or services and examines the specific method used by the suspected offender.
When the case is classified as conventional voice phishing, the existing account freeze and victim refund procedures under the telecommunications financial fraud legislation may apply.
When the case is classified as an emerging phishing scheme, the relevant account may instead be placed under enhanced customer due diligence procedures.
3. Temporary Transaction Freeze for Seven Business Days
Once the account is identified as being connected to an emerging phishing scheme, the financial institution may temporarily restrict both incoming and outgoing transactions.
The Korea Financial Intelligence Unit then reviews the transaction history and the relationship between the victim and the account holder within seven business days of receiving the report.
4. Additional Freeze of Up to 60 Business Days
When the Korea Financial Intelligence Unit determines that the restriction should remain in place, the financial institution may continue the freeze for an additional 30 business days after the initial seven-business-day period.
At the request of the police, the restriction may be extended once for another 30 business days.
During this period, the police may investigate the account’s connection to the suspected crime and trace the movement of funds.
An Account Freeze Does Not Automatically Guarantee a Refund
A suspicious account transaction freeze is intended to prevent funds from being transferred out of an account believed to have been used in a fraudulent scheme.
It does not mean that the victim is automatically entitled to an immediate or full refund.
In conventional voice phishing cases, the statutory process for extinguishing the account balance and refunding eligible victims may apply.
By contrast, a transaction freeze involving an emerging phishing scheme relies on customer due diligence measures under Korea’s financial transaction reporting legislation. It therefore operates differently from the statutory refund process applicable to conventional voice phishing cases.
The method and likelihood of recovery may depend on factors including:
▪️The amount remaining in the account
▪️The number of victims
▪️The nature of the suspected fraud
▪️The outcome of the criminal investigation
▪️Whether the account holder or another participant received or transferred the funds
Depending on the circumstances, the victim may need to file a criminal complaint and separately consider a civil claim for unjust enrichment or damages against the account holder or the persons who participated in the fraud.
Evidence Victims Should Preserve
Delays in reporting may allow the funds to be transferred through multiple accounts, converted into cash, or exchanged for virtual assets.
Rather than continuing to negotiate with the suspected offender, the victim should first consider reporting the matter and requesting that the relevant account be restricted.
Important evidence may include:
▪️Bank transfer receipts, transfer dates, account numbers, and account holder names
▪️Text messages and conversations through KakaoTalk, Telegram, or other messaging services
▪️Screenshots of investment or trading platforms
▪️Requests for additional deposits, fees, or taxes
▪️Contracts, purchase orders, quotations, and business registration information
▪️Telephone numbers, social media accounts, and original files provided by the suspected offender
Leaving a chatroom or replacing a mobile phone may make it difficult to preserve the original evidence. Victims should retain not only screenshots but also exported chat records, attachments, and original electronic files where possible.
What If a Legitimate Business Account Is Frozen?
A business may receive genuine payment for goods or services but still have its account reported as suspicious because the payment is connected to a broader fraudulent fund flow.
Even when the underlying transaction was legitimate, restrictions on a business account may significantly affect payroll, supplier payments, and ordinary business operations.
The account holder may raise an objection with the relevant financial institution or contact the National Police Agency’s Integrated Response Center for Telecommunications Financial Fraud at 1394.
If the police determine that the account is unlikely to be connected to criminal activity, they may request that the financial institution lift the transaction restriction.
A general statement that the payment came from a legitimate transaction may not be sufficient. The account holder should provide objective evidence demonstrating the commercial basis for receiving the funds.
Relevant materials may include:
▪️Contracts and purchase orders
▪️Tax invoices, receipts, and payment records
▪️Delivery and receipt records
▪️Evidence showing that services were actually performed
▪️Communications with the customer or counterparty
▪️Records showing how the received funds were used
▪️Evidence explaining repeated or similar transactions
If the account, debit card, password, or another means of account access was transferred or rented to another person, the matter may go beyond a simple transaction freeze and raise issues under Korea’s Electronic Financial Transactions Act.
Similarly, withdrawing cash or transferring funds while knowing that the money was connected to a fraudulent scheme may result in an investigation for aiding and abetting fraud. The account holder should therefore organize the facts and supporting evidence from the earliest stage.
Key Points for Responding to a Suspicious Account Freeze
Victims of emerging phishing scams should report the incident promptly and preserve all transaction records and communications before the funds are transferred elsewhere.
A person or business whose account has been frozen despite receiving legitimate payment should demonstrate the substance of the transaction and the lawful basis for receiving the funds through contracts, invoices, delivery records, and other objective evidence.
Decent Law Firm assists clients with criminal complaints arising from emerging phishing scams, reviews potential avenues for recovering transferred funds, and advises account holders on objections to transaction freezes and related criminal investigations.
This content is provided for general informational purposes only and does not constitute legal advice for any individual matter.
