🚨 Provisional Seizure for Collection

Today Korean Social News for Beginners | 2025.11.17

0️⃣ Asset Recovery System and Its Limits Seen in Daejangdong Case

📌 Daejangdong Group Made 780 Billion Won from 300 Million Won Investment... Despite Seizure Order, 'Gangnam Building Shopping' Controversy Grows

💬 Private developers in the Daejangdong case invested 350 million won and made nearly 780 billion won in profits. They then concentrated on buying buildings in Gangnam and real estate in Seoul and Suwon areas. Prosecutors obtained a provisional seizure order from the court for approximately 200 billion won worth of assets including land, buildings, and deposits acquired with criminal proceeds, preventing their disposal. However, the first trial court ordered collection of only 47.3 billion won, much less than the 752.4 billion won requested by prosecutors. After prosecutors gave up their appeal, the possibility of recovering the remaining huge assets has greatly decreased. Particularly, some defendants received no collection orders, raising concerns that the provisional seizure orders already issued could be lifted gradually.

💡 Summary

• Provisional seizure for collection is a temporary measure to freeze criminal proceeds before trial.
• In the Daejangdong case, 200 billion won worth of assets were frozen, but only 47.3 billion won was actually collected.
• If collection is not recognized in the main trial, frozen assets can be released, revealing system limitations.

1️⃣ Definition

Provisional seizure for collection means a court decision to freeze a defendant's assets obtained through crime before the trial ends, to prevent them from hiding or disposing of those proceeds in advance. When a guilty verdict is confirmed later and a collection order is issued, the actual collection is executed from these preserved assets.

Simply put, it's "a temporary measure to tightly lock up criminal proceeds so they cannot be taken away." For example, if a defendant suspected of earning 10 billion won through crime tries to sell real estate or transfer money abroad during trial, their assets are frozen in advance. However, since it's only a 'temporary' measure, if collection is not recognized in the main trial or the amount is reduced, the preservation order can also be canceled or reduced accordingly.

💡 Why Is This Important?

• Freezing criminal proceeds in advance makes actual recovery possible.
• Prevents criminals from hiding or disposing of assets, increasing the effectiveness of punishment.
• Increases public trust in the law and cuts off economic benefits from crime.
• Understanding and seeking improvements for the system's limitations is important.

2️⃣ Daejangdong Case and Problems with Provisional Seizure

📕 Development of Daejangdong Case and Provisional Seizure Orders

• Enormous criminal proceeds were generated. Key details are as follows.

  • Private developers invested 350 million won and earned about 780 billion won in profits.
  • With these profits, they concentrated on buying buildings in Gangnam and real estate in Seoul and Suwon areas.
  • Prosecutors judged that their asset acquisition came from criminal proceeds.
  • They obtained provisional seizure orders for approximately 200 billion won worth of land, buildings, deposits, etc.

• Prosecutors responded actively to recover criminal proceeds. Key measures include:

  • Prosecutors requested collection of a total of 752.4 billion won from the court.
  • They applied for provisional seizure orders to prevent defendants from disposing of assets.
  • The court granted preservation orders for approximately 207 billion won worth of assets.
  • Various forms of assets including real estate, deposits, and stocks were frozen.

📕 Problems and Controversies with First Trial Verdict

• The actual collection amount was greatly reduced. Key problems include:

  • The first trial court ordered collection of only 47.3 billion won out of the 752.4 billion won requested by prosecutors.
  • Some defendants received no collection orders at all.
  • A large gap of over 150 billion won occurred between the preserved amount and actual collection amount.
  • The possibility of recovering most criminal proceeds has decreased.

• Prosecutors gave up appeals, eliminating recovery possibilities. Key controversies include:

  • Prosecutors gave up appeals for some defendants.
  • This effectively confirmed the zero-won collection verdict.
  • Preservation orders for assets without confirmed collection must be lifted sequentially.
  • High-value real estate like Gangnam buildings that were frozen could return to the defendants' hands.

📕 Systemic Limitations and Problems

• Fundamental limitations of provisional seizure orders were revealed. Key limitations include:

  • Preservation orders are only temporary measures to freeze assets, they don't guarantee recovery.
  • If collection is not recognized in the main trial, preservation orders become meaningless.
  • Collection scope is often narrowly recognized because proving the causal relationship between crime and assets is difficult.
  • Tracking and proving borrowed-name assets and family-member-name assets is not easy.

• Prosecutors' burden of proof conflicts with courts' cautious judgment. Key issues include:

  • Prosecutors must clearly prove assets are criminal proceeds.
  • Courts apply strict standards to protect defendants' property rights.
  • It's often difficult to track whether specific assets came from criminal proceeds.
  • As time passes, asset flows become more complex, making proof more difficult.

💡 Key Issues with Provisional Seizure for Collection

1. Gap between preservation and recovery: 200 billion won preserved but only 47.3 billion won recoverable
2. Impact of giving up appeals: Some defendants' zero-won collection confirmed, making release of preservation orders inevitable
3. Difficulty of proof: Proving causal relationship between criminal proceeds and assets is a core challenge
4. System limitations: Effective recovery impossible with preservation orders that are only temporary measures
5. Social distrust: Public trust in law declines as enormous criminal proceeds are not recovered

3️⃣ Directions for Improving Criminal Proceeds Recovery System

✅ Improving Proof Standards and Procedures

• Procedures for proving criminal proceeds must be strengthened. Key directions include:

  • Systems to track borrowed-name accounts and family-member-name assets must be established.
  • Cooperation with the Financial Intelligence Unit (FIU) must be strengthened to closely identify fund flows.
  • A criminal proceeds presumption system can be introduced to require defendants to explain asset sources.
  • Prosecutors' expert investigation capabilities must be enhanced and digital forensic technology actively utilized.

• Courts' judgment standards must be clarified. Key tasks include:

  • Specific guidelines are needed on what cases can be recognized as criminal proceeds.
  • Case law considering the characteristics of large-scale economic crimes must be accumulated.
  • A reasonable balance between property rights protection and criminal proceeds recovery must be found.
  • Legal principles for reasonably recognizing collection scope must be developed.

✅ Systemic Supplementary Measures

• Effectiveness of provisional seizure orders must be increased. Key measures include:

  • Assets subject to preservation orders should be broadly recognized to block criminal proceeds concealment.
  • Third-party-name assets should be included in preservation targets if substantive ownership is recognized.
  • Penalties for violating preservation orders should be strengthened to prevent defendants' asset concealment.
  • Swift trial proceedings should shorten preservation periods and prevent asset value decline.

• Amendment of the Criminal Proceeds Recovery Act is necessary. Key contents include:

  • The criminal proceeds presumption system should be legislated to reasonably distribute the burden of proof.
  • The third-party confiscation and collection system should be expanded to recover family or acquaintance-name assets.
  • A basis for comprehensive confiscation of all assets of criminal organizations should be established.
  • International cooperation should be strengthened to track and recover assets fled abroad.

✅ Social Consensus and Awareness Improvement

• The importance of criminal proceeds recovery must be recognized. Key tasks include:
  • Thoroughly depriving profits obtained through crime has crime prevention effects.
  • The perception that corruption and economic crimes are 'profitable crimes' must be changed.
  • A system to return recovered assets to victims and citizens must be established.
  • Public trust must be restored through transparent recovery procedures and result disclosure.

4️⃣ Related Terms Explained

🔎 Collection and Confiscation

• Collection is a system where the state recovers the monetary equivalent of economic benefits obtained through crime.
  • Collection is a type of punishment that recovers in money the benefits a defendant obtained through crime. For example, if someone embezzled 100 million won, the court can order collection of 100 million won. Even if the defendant already spent that money, they must pay the amount equivalent to the benefit.
  • Key characteristics of collection include: First, its purpose is to deprive economic benefits obtained through crime. Second, it's a method of paying money rather than objects. Third, if not paid, assets can be seized and sold through forced execution. Fourth, collected money belongs to the state treasury.
  • On the other hand, confiscation means the state takes the objects themselves that were directly used in crime or obtained through crime. For example, confiscating a vehicle used in drug dealing, or confiscating counterfeit bills. Collection targets 'monetary value' while confiscation targets 'objects themselves' - this is the key difference.

🔎 Preservation Measures Under Criminal Procedure Act

• Preservation measures are actions to freeze assets in advance to ensure execution of collection or confiscation.
  • The Criminal Procedure Act and related special laws have a 'preservation measure' system to ensure execution of collection or confiscation. When prosecutors apply to the court, the court examines whether the assets are related to criminal proceeds and whether there is necessity, then issues an order.
  • Types of preservation measures include: First, provisional seizure for collection freezes assets subject to collection. Second, preservation orders for confiscation prohibit disposal of objects subject to confiscation. Third, civil preservation measures like provisional attachment or provisional disposition can be conducted in parallel.
  • However, since preservation measures strongly restrict defendants' property rights, relevance, necessity, and proportionality can be issues. Courts comprehensively consider the degree of criminal suspicion, asset source, possibility of flight or concealment, etc., to decide whether to preserve and the scope. When there's a large difference between the preserved amount and actual collection amount as in the Daejangdong case, criticism of excessive preservation can be raised.

🔎 Act on Regulation of Criminal Proceeds Concealment

• The Act on Regulation of Criminal Proceeds Concealment is a law to prevent acts of hiding or disguising proceeds obtained through crime, and to actively track and recover them.
  • The Act on Regulation of Criminal Proceeds Concealment (official name: Act on Regulation and Punishment of Criminal Proceeds Concealment, etc.) is a special law enacted to punish acts of concealing or disguising criminal proceeds and to actively track and recover criminal proceeds.
  • Key contents of this law include: First, it punishes those who conceal or disguise criminal proceeds (crime of concealing criminal proceeds). Second, it broadly recognizes confiscation and collection of criminal proceeds and assets derived from them. Third, it established the basis for preservation measures like provisional seizure for collection. Fourth, it stipulates financial institutions' duty to report suspicious transactions.
  • Borrowed-name accounts, family or acquaintance-name real estate commonly seen in large corruption and economic crimes can also be subject to preservation if recognized as criminal proceeds. However, in actual trial processes, the problem of proving specific assets 'came from crime' is complex, so cases like the Daejangdong case where collection scope is narrowly recognized do occur.

🔎 Asset Source Investigation and Criminal Proceeds Presumption

• The criminal proceeds presumption system is a system that reasonably distributes the burden of proof by requiring defendants to explain the source of their assets.
  • To recover criminal proceeds, prosecutors must prove that specific assets came from crime. However, when criminals conceal assets through money laundering, borrowed-name transactions, etc., proof becomes very difficult. Therefore, some countries have introduced a 'criminal proceeds presumption' system.
  • The core of the criminal proceeds presumption system is: when there are assets that cannot be explained by a defendant's legal income, they are presumed to be criminal proceeds, and the defendant must provide counter-proof. For example, if a public official with an annual salary of 50 million won bought a 1 billion won apartment, the defendant must explain the source.
  • This system facilitates recovery of criminal proceeds by partially shifting the burden of proof, but careful design is needed as it can conflict with the presumption of innocence. Korea has not yet fully introduced this system, but recognizes it limitedly in some special laws, and discussion of introduction is becoming active with cases like Daejangdong as a catalyst.

5️⃣ Frequently Asked Questions (FAQ)

Q: If you receive a provisional seizure order, can you not use your assets at all?

A: Assets under preservation orders are prohibited from disposal, but minimal use for daily life may be possible.

• When a provisional seizure order is issued, disposal actions like sale, donation, or collateral provision of those assets are prohibited. For real estate, preservation registration is made on the registry, making sales virtually impossible, and withdrawals from deposit accounts are restricted. Stocks or bonds also cannot be sold.
• However, since defendants' right to life cannot be completely denied, courts consider this to some extent when determining preservation scope. For example, among multiple real estate properties, actual residence homes may be excluded from preservation targets, or minimal accounts for living expense withdrawals may be left. But in cases like Daejangdong where hundreds of billions of won in criminal proceeds are suspected, extensive preservation is inevitable. If you want to object to a preservation order, you can file an appeal.

Q: What happens if you can't pay the collection money?

A: Assets are seized and sold through forced execution, or it can be substituted with detention in a workhouse.

• When a court's collection judgment is confirmed, defendants must pay the collection money within the designated period. If they don't pay voluntarily, prosecutors proceed with forced execution procedures. Defendants' real estate, deposits, stocks, salaries, etc. are seized and sold to cover the collection money.
• Even so, if the collection money is not fully paid, workhouse detention can be ordered. This is a system where collection money is paid as a substitute by being detained in a workhouse for a certain period and working. For example, if someone fails to pay 100 million won in collection money, they can be detained in a workhouse for one year (conversion standard is set by the court). However, even after workhouse detention ends, the obligation to pay collection money does not expire, and if assets are discovered later, execution can resume. Therefore, collection is a very powerful sanction.

Q: Why was the collection amount in the Daejangdong case recognized so little?

A: Because proving the causal relationship between criminal proceeds and assets is difficult, and the court applied strict standards.

• Prosecutors requested collection of 752.4 billion won, but the first trial court only recognized 47.3 billion won. This is because it was difficult to clearly prove that specific assets came from criminal proceeds. For example, if a defendant claims "I bought this real estate with money I had before the crime" or "I bought it with profits from other legal business," prosecutors must prove that's false.
• Also, courts tend to judge collection scope conservatively, emphasizing protection of defendants' property rights. Especially for third-party-name assets or indirectly acquired assets, proving causation is even more difficult. The Daejangdong case went through several stages of complex transactions, making it difficult to clearly track fund flows, which appears to have led to the low collection amount. Experts point out that system improvements like introducing a criminal proceeds presumption system are necessary.

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