RESOURCE MATERIAL SERIES No. 55

ECONOMIC AND COMPUTER CRIME IN KOREA
Choi Joon-Weon*
I. INTRODUCTION
The large scale economic crimes (i. e. Lee
and Chang’s bank bill fraud case,
Myongsung case, Youngdong case) and realestate speculation crimes which took placein the early 1980’s made the Korean people
aware of the seriousness of economic crime.
Since the late 1980’s, computer crime has
rapidly increased as the users of computers
and the Internet have increased.
However economic crimes, including
computer-based crimes, are very hard forinvestigating authoritles to gather
evidence on, since such crimes are beingcommitted in an organized andintellectualized way, and the evidence canbe easily destroyed. Most investigating
authorities are not specialized enough tocope effectively with economic crime.
Therefore, it is necessary to develop
diversified countermeasures, in accordancewith each situation facing economic crimes.
II. REPRESENTATIVE TYPES OFECONOMIC CRIME AND
LEGISLATION IN KOREA
A. Tax and Tariff Evasion
The accusation of the taxation office is aprerequisite to indict for the evasion of tax
amounting to less than 50 million won (1USD $1=1300 won). Because the taxation
office punishes most evaders with
forfeiture instead of accusation, few
evaders have been indicted by prosecution.
B. Monopoly and Unfair Trade
Korea established the Act on Monopoly
Regulation and Fair Trade in 1980. In line
* Public Prosecutor, Seoul District Prosector’s Office,Republic of Korea

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with the introduction of the Act, the Fair
Trade Commission was established. This
Commission is committed to removing anticompetitive regulations which act as astumbling block to free business activities,
and to alleviate economic concentration.
The main crimes against this law are(i) anti-competitive aspects(ii) abusive acts(iii)undue collaborate acts(iv) unfair trade acts
C. Infrigement of Intellectual
Property
Korean people are not yet familiar with
the notion that intellectual property (IP)should be protected as a kind of real
property. To spearhead Korea’s efforts toeradicate violations of IP, the Joint
Investigation Team which specificallyhandles IP infringement cases wasorganized at every District Public
Prosecutors Office in January 1993. Since
then, vigorous crackdowns have been
carried out on IP infringements such as
illegal copying of computer software andvideo game cartridges, unauthorized soundrecordings and videos, and counterfeited
footwear. The result of the nationwide
crackdown was remarkable. Publicawareness of IP has also been enhancedby the continuous reports of mass media,
which is, in some sense, the most crucial
countermeasure for effective protection ofIP.
D. Insolvent Stock Openings
The Securities Transaction Law of Korea
provides that any company, which wants
to go public in order to join the stock
market, should satisfy the requisite
financial conditions achieved by the justexamination of a certified public110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
accountant (CPA).
If an insolvent enterprise disguises its
own financial condition through conspiracy
with a CPA, and places its stocks on themarket, it may cause damage to the many
innocent consumers who subscribed tothose stocks. That scheme has no purpose
but to defraud consumers. In Korea, thiskind of fraud is restrained by the Securities
Transaction Law. In 1992, the managing
staff of 15 bankrupt corporations wereindicted and sentenced because of this typeof scheme. The financial damage ofdefrauded stockholders was presumed to
exceed seveval billion won.
The manipulation of stock price is also
restrained by the Securities Transaction
Law. This is an act conducted by conspired
trades, which induces the purchase or saleby others in the stock market, misleading
consumers to believe that the trade is in aprosperous condition, and to make a wrong
decision.
E. Illegal Cheques
The Illegal Cheques Control Act wasestablish in 1961 to actively cope withillegal cheques in Korea. Under this Act,
issuing an illegal cheque intentionally or
accidentally, is one of the primary crimes
subject to punishment. On the other hand,the offender of this crime is not punishedwhen the holder does not want to charge
the offender. Other types of cheque crimes
include forged cheques, false reports,
violation of reporting obligations by banks
etc.
F. Dishonored Promissory Note
In the commercial transactions of Korea,
promissory notes are very widely used asmeans of payment for goods and services.
By issuing or falsifying (faulty) bank bills,
that will be obviously dishonored, many
offenders are frequently defrauding
enterprises of goods or service exchanged

for those bills, which causes serious
damage to the enterprises receiving thefaulty bank bills as payment. Every year,
thousands of enterprises in Korea havegone bankrupt by fraud through faulty
bank bills.
G. Credit Card Crime
In Korea, credit cards are widely used
as a means of payment. The fraud patternsof credit card crime occurring in Korea are
as follows:(i) using a stolen or lost credit card
against the card holder’s will;(ii) using a forged credit card;(iii)using credit cards excessively tosettle payments;(iv) defrauding a credit card company bydemanding money with a forgedcredit card voucher.
H. Pyramid (Multi-level) Sale
Schemes
Since the late 1980s in Korea as well asJapan, pyramid selling has negatively
impacted society because of its monetaryand mental damage to large-scaleconsumers. Previously, we had tackled thepyramid sale scheme by the provision of
fraud in the Criminal Code. However weunderwent some difficulty in sentencing
pyramid sale scheme parficipants as ‘fraud’criminals, and in catagorising theconsumer participants as victims of fraud.
Thus in June 1992, the Door-to-Door
Sales Law was enacted and came into force
to regulate multi-level marketing, namely,
pyramid sale schemes. The Law of 1992
was effective enough to curb the
proliferation of pyramid sale schemes.
Apparently since the Law came into effect,
pyramid sale schemes have subsidized in
Korea.

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RESOURCE MATERIAL SERIES No. 55
I. Fraud, Embezzlement, Breach ofTrust
In Korea, there are too many cases offraud, embezzlement or breach of trust
being reported to investigation agencies.
Almost all of these cases are reported by
the victim’s, however, few of these cases areindicted; rate of about 12% in fraud cases
and about 23% in both embezzlement andbreach of trust cases.
For reference, in 1995 the number of thecomplaints was 471,702 in Korea, while itwas 10,596 in Japan. The number ofcomplaints per 100,000 capita in Korea in
124 times as many as that of Japan. The
reason why there are such a great numberof complaint cases in Korea is explainedby:(i) The trend that a party concernedchooses to settle the dispute bycriminal investigation, even in civil
cases such as payment default, on
account of time consuming civil
procedures.
(ii) The practice of investigating agencies
to receive complaints
indiscriminately without
examinating whether they are worth
investigating as criminal cases.
Because of such an excessive number ofcomplaint cases, the problems of violating
the rights of the complained, and wasting
investigation resourses, are getting worse.
Therefore, versatile programs to solve thisproblem are under consideration.
J. Organizational Structure(1) Prosecutor’s Office(2) Police(3) Customs, Office of National Tax
Administration(4) Fair Trade Commission(5) S e c u r i t y ( I n s u r a n c e , B a n k )Supervisory Board

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K. Money Laundering and Asset
Forfeiture
The Republic of Korea declared theSpecial Act Against Illicit Drug Trafficking
in December 1995. Only money laundering
related to drug offenses is criminalized.
Korea does not have a special act for money
laundering control, as exists in the U.S.A.
We do not criminalize money laundering
itself. Consequently, we can’t punish
money laundering if it is not related to adrug offense. Only the assets related tothe drug offense and special crimes
committed by officers can be forfeited.
In January 1993, concerned authorities
in the Korean Government jointly started
legislating a new statute for asset forfeiture
related to drug offenses. In the middle of1993, a large-scale local tax evasion casewas revealed. The officers who were in
charge of local tax collection received bribes
and falsified the collection data to disguiseand prevent the evaded tax from being
collected. In that case, the concerned
officers revealed that they accummulated
in excess of USD $2 million. However theGovernment was unable to access themoney. As a result of that case, in
December 1994 the Korean government
made a special statute for asset forfeiture
related to special crimes committed by
officers.
III. MAIN CASES OF ECONOMIC
CRIME IN KOREA
A. Lee & Chang’s Case
Lee and Chang’s bank bill fraud casetook place in May 1982. Lee and Chang
defrauded 6 business enterprises, sufferingfrom financial difficulties, of promissory
notes equivalent to 164 billion won and put
them into circulation. This kind of fraud
was possible because Lee and Chang took
advantage of their position as the relativesof the President of Korea.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
The prosecution indicted 30 people,
including Lee and Chang, bank personnel
and the public officer involved in the case.
This was the largest fraud case during thestage of high economic growth in Korea,
and shocked the whole nation. The
prosecution suffered from many problems
such as leakage of investigation secrets,
overlapping or unnecessary investigations,which provided a good lesson for theinvestigation of large scale fraud cases
thereafter.
B. Fraud Sales in Department
StoresIn January 1989, a consumers
association made a complaint against
several department stores on the suspicion
that they deceived consumers by attachinga false previous price tag to merchandise
to make the consumers believe that thestores were selling the goods at a special
price. That is, the department storesattached tags written with “400,000/
300,000”, as if they had been selling
merchandise at a special price. The items
were scheduled to sell at the price of
300,000 won from the beginning.
Though the sales managers of the 6
department stores were indicted for the
fraudulent sale, they were given a sentenceof not guilty by both the District andAppellate Court for the reason that they
did not cause actual financial loss toconsumers. After long-term examination,
the Supreme Court reversed the sentenceof the Appellate Court, and the sales
managers were finally given a guilty
sentence.
C. A Large Scale Smuggling CaseIn April 1995, the Seoul District
Prosecutor’s Office indicted 18 people (14arrested) involved in a ring of gold
smuggling disguised as a legal enterprise.
They smuggled gold by hiding it in hollow
silver bars for camouflage. This was thelargest seisure of gold (188kg) confisticatedin a single smuggling case.
D. Fraudulent Representation of
Coporate Financial Statements
In April 1992, Seoul District Prosecutor’s
Office indicted 24 people, including the
CPAs and the directors of the enterprises,
who prepared and audited the financial
statements that were fraudulently
presented and caused investors to believe
the misrepresented financial statement.
These enterprises were bankrupt before
the investigation began. The investors whobelieved in the false financial statements
suffered huge losses that could not becompensated.
E. Tax Embezzlement Case
In September 1994, the officers who werein charge of local tax collection received
bribes for falsely processing collectible tax
not recieved from the tax-payers.
Furthermore, they embezzled the tax
received from taxpayers by forging receipts.
This embezzlement was possible because
the computer system for the collection of
local tax, such as acquisition tax andregistration tax, was not set up then. The
Inchon District Prosecutors Office indicted
135 people (92 arrested) including taxation
officers and the legal affairs officepersonnel.
F. Manipulation of Stock Price
In May 1998, the Seoul Distric
Prosecutor’s Office indicted 11 persons (7a r r e s t e d ) i n c l u d i n g M r Wo o , f u n dmanagers and investment company
personnel who helped Mr Woo with themanipulation of the price of a spinningbusiness company. The market price of thecompany’s stock doubled in 5 months after
the manipulation. The fraud was
conducted by the following methods:(1) Inducing price rise by purchaseorders at the highest price possible.
(2) Placing purchase and sales orders

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RESOURCE MATERIAL SERIES No. 55
intentionally at the same time, toshow designated stock as very
popular.
(3) Disclosure of a false information andnew technological developments
which might cause price rises inrelated stock.
(4) T h e i n s t i t u t i o n a l i n v e s t o r smaintained the purchase trend for aconsiderable period of time.
G. Credit Card Fraud Case
In May 1996, the Seoul DistrictP r o s e c u t o r ’s O f f i c e i n d i c t e d 1 3 0
entertainment businessmen and membersof a bogus credit card company (37arrested) who evaded sales tax by reporting
the sales amount as being less than it was.
This fraud was conducted by the following
methods:(1) O p e n i n g a b o g u s c r e d i t c a r dmembership store by forging businessregistration certification.
(2) Setting up a credit card identification
machine and giving ID numbers of
the bogus credit card membershipstore to an entertainment store (ie.
bars. nightclubs etc).
(3) The entertainment store then sells
sales receipts at 90% of the real sales
purchase price to the bogus credit
card company, which causes the tax
evasion.
(4) The entertainment store gives bribes
to bank managers and credit cardcompany personnel so that they don’tcancel the credit card contracts.
H. HanBo Case
This was a representative case which
took place in January 1997, showing theconnection between politics and theeconomy in Korea. Mr Jung, President ofHanbo Steel Corporation, bribed somepoliticians who forced the bank to lendmoney to his company that seemed to havea very slim chance of profitability andgrowth.

192

Unable to repay the loan amount of 3.2
trillion won (about USD $ 2.8 billion), theHanbo company went bankrupt, causing
serious damage to the Korean economy.
The Korean citizens became angry atpoliticians and businessmen. The
prosecution arrested and indicted 10
people, including Mr Jung and influential
politicians of both the ruling and opposition
parties, former ministers, and thepresident of the bank, most of whom were
found quilty and sentenced.
IV. PROBLEMS IN CONTROLLINGECONOMIC CRIME
A. Lack of Specialization
To i n v e s t i g a t e e c o n o m i c c r i m e seffectively, general investigators shouldhave some specialized knowledge
concerning the details of foreign trading
procedures, bank finance procedures, tax
calculation systems, and analyzing
techniques of account records or financial
documents, etc. Otherwise, they may often
be led astray by the explanation of asuspect.
The lack of the above makes generalinvestigators or policemen depend upon
their experience alone. In Korea, bothpublic prosecutors and generalinvestigators go through formal training
courses that teach specilized areas to help
them investigate economic crimes.
B. Difficulties in Proof-Collection
In most economic crimes, just as it iseasy for offenders to eliminate or deform
proof, it is very difficult for investigators
to detect and prove interference withevidence. Furthermore, judges in Korea
who are responsible for criminal trials
require strict specification of the content
and range of evidence in an indicted case.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
C. Name Lending (Concealment ofReal Name)
In Korea, many offenders who caused
their creditors to be confronted withfinancial damage due to their bankruptcy
or economic offenses, frequently restart
their business under the names of theirwives or relatives quickly after being
punished for their wrongdoings.
Furthermore, they even promote chequetransactions with the bank under theirwife’s or relative’s name. Of course, any
enterprise or individual that fails to settle
a bank cheque is questioneed by the bank,and thereafter restricted from issuing bankcheques for a certain period of time by law.
However, if that enterprise or individual
tries to restart a business by stealth, under
the name of another person, it is difficult
to detect the real person. This factor plays
an important role in the recurrence ofeconomic crime.
D. Difficulty in Initiating
Investigation
The high social influence of someoffenders makes it difficult to initiate
investigation. Some offenders distribute
their illegal proceeds to politicians who
have influence or power to appoint or
dismiss criminal justice officials andprotect the offenders from being punished.
Therefore, the criminal justice officials
often initiate investigating offenders only
after having decisive evidence.
V. COMPUTER CRIME IN KOREA
A. Introduction
1. Drastic Increase of Users of Computers
and the Internet
From the late 1980’s, inexpensive
personal computers were distributed andbecame widely popular in Korea. Further,communication technology development
enabled personal computers to beconnected to each other through networks.

As a result, the average person, as well as
experts, has the opportunity to takeadvantage of computers and to have easy
access to information through computers.
2. Definition of Computer Crime
Computer crime is defined as ‘a crimein which a computer is used as a tool ofcrime or is an object of crime, or a crime
related to data or knowledge processed
through a computer’. In this context,
computers include hardware, software anddata. (Some scholars use the terminologyof ‘Information Crimes’ to refer collectively
to the crimes with respect to information
or information processing machinary;devices including computer crime andcomputer-related crime).
B. Computer Crime Under Korean
Law
1. Regulation Necessity
First, computers create new and various
tools for crime. Traditional crimes can becommitted in new ways, for example there
could be: computer-using fraud; disclosureof personal information of individual;
infringement on corporate information;diffusion of obscene materials throughcommunication networks; or defamation bymeans of commercial networks orelectronic mail.
Second, computer-based crime can cause
disorder in the basic structure of eachsector of society, including, but not limited
to, economic damage. The more dependent
on computers the society is, the more
serious the potential for damage. If afinancial network, a resident registration
network or land integrated information
network, which are already in operation,
are victimized by crime, its result will not
be limited to economic damage.
Third, computer-based crime is very
hard to uncover and prove. Because

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RESOURCE MATERIAL SERIES No. 55
computers store volumous data into small
spaces such as disks, magnetic tapes andstored data, they have many nonaccessible, confidential and invisible
characters. Especially in the case ofcomputer programs, there is a peculiar
program language and expression or
technology unique to each programmer.
Thus, even computer experts may havedifficulty in fully examining the works ofother programmers and in finding errors.
Therefore, it is necessary to recognize theimportance of the prevention andsuppression of computer crimes and todevelop competent countermeasures.
2. Korean Law(i) Criminal Law
The amendment of the Criminal Law asof December 31, 1996 added special media
records, like electronic records, as an objectof crime, into the crimes of: rendering nulland void symbols of official secrecy (§140);
untrue entry in officially authenticatedoriginal deeds (§228); utterance of falsified
public document (§229); utterance offalsified private documents (§234);
violation of secrecy (§316); obstructing
another from exercising his/her rights(§234); robbery by hostage (§336). The
amendment also created new provisions of:preparation of false public documents(§227); interference with business (§314 II);fraud by use of computer (§347-2); andadded special media records into the objectof forfeiture.
(ii) Special Laws Related to Computer
Crime• Act for Expanding Distribution andFostering Usage of Computers• Act for the Protection of Personal
Information in Public Agencies• Military Secret Protection Act• Basic Electric Communication Act• Telecommunication Business Act• Communication Secrecy Protection

194

Act
• Radio Wave Act• Election for Public Office and Election
Malpractice Prevention Act• Computer Program Protection Act• Copyright Act, Patent Act,
Trademark Act, Design Act, Utility
Model Act,• Unfair Competition Prevention Act
C. Status of Computer Crime
1. Type of Computer Crime
Computer Crime is composed of each or
combined types of computer hacking (which
is a typical type of computer crime),eavesdropping or wiretapping of computercommunications and telephones,
disturbance of telephone systems andphone phreaking, cryptanalysis or codebreaking, computer virus etc.
2. Manipulation of Electronic Records etc.
The misconduct of manipulating
computer programs or electronic records isbeing committed by way of manipulating
commercial or financial files such as pointof-sale, electronic funds transfer systems
or Trojan Horses, Superzapping Trap
Doors, Logic Bombs, and Simulations andModeling, which are expanding worldwide.
Such misconduct has been repeated for along time and is difficult to uncover.
An international counterfeit ring ofcredit cards was prosecuted at the end of
1995 in Korea. A woman working in thelocal post office was under arrest forembezzling about 4.6 billion won by meansof falsely recording deposit accounts during
the 6 years from 1988 to 1994. In July
1997, it was revealed that personnel in the
Choheung Bank conspired with a private
lender to unduly loan 65 billion won to him.
Bank personnel operated a terminal to
make a false deposit to the lender’s bankaccount. In exchange, he recieved bribes
totalling 85 million won.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
In February 1998, a 23 years old person
working in an island post office in
Cheonnam province operated the post officeterminal to make a deposit of about 8billion won into 58 non-named or nameborrowed accounts, and withdrew 2.7
billion won in Seoul over two days anddisappeared.
3. Information Espionage
Information espionage, which includes
industrial espionage, means an act ofgathering, or transmitting illegally,
confidential information regarding thebusiness of other people, companies or thenation.
In Korea, a certain company transmitted
the production methods of high-techindustrial equipment to Eastern European
countries in July 1988, attracting publicattention. In December 1992 an
Australian, who was working (as atechnology consultant) in a Korean
manufacturing company of speakerproducts, copied the production technology
onto floppy diskettes and sold it to theUnited States.
In addition, 19 people in organizations
as industrial spies were arrested by aprosecutor after they stole, and transmitted
to a Taiwanese semi-conductor production
c o m p a n y, m a n u f a c t u r i n g p r o c e s s
information of circuit charts for 64 Mega
D-Ram of domestic semi-conductor
production companies such as Samsung
and LG.
4. Information Piracy
While information itself is intangible, amedia (device) embodying it can be
reproduced. Information piracy is an act
to make free use of valuable information
by reproducing information that has
national, social and economic value,
without authorization. Its primary target
is computer programs, i.e. software. Illegal

reproduction using Writable CD ROM, aswell as on-line distribution throughcomputer communication, is prevalent in
Korea.
Especially, the Internet is becoming
popular. The number of users having
application programs which enable multimedia production has been rapidly
increasing, and the combination of credit
card systems and electric commerce has
made possible transactions amongindividuals in cyber-space. Thus, theInternet, is an exemplary electronic market
that could be used as a huge duplicator.
5. Infringement of Privacy
As society is going toward an
information era, every organization
including national and private businesscompanies are creating databases of
personal information of people related toits business, such as residents, customers
and patients, using information processing
machines (devices). Revealing such data
to other people could cause a serious
violation of that persons rights.
In 1992, a list of employees who engaged
in labor disputes was circulated among
employers in Pusan, Korea. Those on thelist were rejected to be hired. In 1993, 25
police officers who obtained resident
references or criminal records withoutauthorization and distributed them to thedelivery service company which gave thembribes, were arrested by the Seoul District
Prosecutor’s Office. In 1994, department
store personnel sold a database about large
customers to whomever wanted suchinformation. As a result, those customers
became the target of a criminal murderorganization called Jizon-pa, causing a big
sensation nationwide.
Despite such troubles, the fact thatmaterials which are printed out frominformation processing machines (devices)

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detailing bank or business transactions arestill being used as wrapping paper in street
shops near subway stations, shows aserious problem in security for those whoare engaged in computer-related work in
Korea.
Under the Credit Information Usage andProtection Act, it is prohibited to illegallygather and investigate particular
information such as privacy. To engage ina non-licensed credit information business,and to disclose such information other thanfor the contemplated purpose, is illegal.
Further, the Public Institution’s Private
Information Protection Act prohibits
private information files, gathered andkept by public institutions, from being
disclosed without authorization, or being
taken advantage of for undue purpose.
However, from the fact that private study
institutes are sending letters or e-mail toeach house promoting out-of-school studies,
we may conclude that a lot of personal
information about subscribers of computercommunication networks are leaking out
through illegal channels. Therefore, theprotection of privacy seems to be a serious
problem in Korea.
6. Cyber-Terror
Cyber-terror is an act to make threats
to do harm to an other’s life, body or
p r o p e r t y, t h r o u g h a n i n f o r m a t i o nprocessing machine (device), or an
information communication network, or tointend to obtain money or something ofvalue by means of such threats. There were
two such cases in August 1997 in Korea
which were uncovered by the prosecutor’s
office. One case stopped the function ofInternet e-mail via “Hitel’’, a local internet
service company, by way of sending 100,000
e-mails to the same person at the sametime. Another made the Internet
connection (access) network of “Naunuri’’,a local Internet service company, out oforder by way of sending 20 people a huge196

file of 450 Mb at the same time.
7. Distribution and Exhibition of Obscene
Materials
Obscene sites on the Internet, without
any restriction to access, is a problem. In
Korea, the people who opened an obscene
site on the Internet and sold the visual
images, which were combined with picturesof an actress’ face, were arrested byprosecutors in April 1998.
Under the Korean Communication
Secrecy Protection Act, with regard to theinvestigation of obscene materials,
wiretapping with a warrant is allowed forthe investigation of certain crimes.
However, on-line wiretapping duringcommunication, which is needed to find out
the extent of violence or whether it isobscene or not, is not allowed. Such
restriction is creating trouble ininvestigation practices.
D. Actual Situation of Computer
Crime Control in Korea
The investigation results of computer
crime (have been provided in tables III and
IV of Annexure A.)
1. Main Investigation Cases• Hacking case in Seoul National
University computer system (’96.3)• Hacking case in Pohang Technology
College computer system (’96.5)• Home Banking Fraud case by meansof account transfer through hacking(’96.9)• Fraud case by manipulating
computer networks in the Office ofRailroads (’97.3)• Leaking case of Drafting List in the
Office of Military Manpower (’97.4)• Hitel Computer Businessinterference case by way of anelectronic mail bomb (’97.8)• Large Amount Withdrawal case bymanipulating a terminal in a post

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
office (’98.2)
2. Establishing Investigation Systems
The Information Crime Investigation
Center was set up in the Seoul District
Prosecutor’s Office in April 1995 and theInformation Crime Countermeasure
Headquarters was newly established in theCentral Investigation Department of theSupreme Prosecutor’s Office in June 1996.
Some prosecutors were designated to be incharge of Information Crime in each of the
20 local branches of the District
Prosecutor’s Office on December 20, 1996
and an investigation squad (team) was
created in each District Prosecutor’s Officein Seoul, Taegu, Pusan and Kwangju on
April 25, 1997. Thus a nationwide
investigation system of Information Crime
was set up.
3. Training of Investigation Experts
To date, there are 48 investigators
trained through experts training programs
and systems management education
programs. Further, it is planned to train
35 investigators each year totaling about
150 investigators by the year 2000.
4. Introduction/Operation of New HighTechnology Equipment
A full-time investigation team for
Information Crime was provided with hightechnology computer equipment for
networking, and Internet exclusive lines
for setting-up hacker chasing systems.
Further, it created its own internet
homepage and is providing Internet
connection services through a terminal
server.
5. Research/Development of Investigation
Techniques
Developing an analysis system of
evidence in computer crime wascommenced in order to gather and analyze
Information Crime-related materials.
Such a system is also required for generalcrime-related evidence that is being
inputted into electronic records orcomputer files.
6. Building up Investigation Support
Systems
In light of the trend towards a rapid
increase of setting up and using various
databases, it is planned to promptly build
up a database system for investigation ofInformation Crime and general crime, andto have a Full-time Information Crime
Investigation Team to support any selfinitiated (“sua sponte’’) investigation using
databases.
E. Measures to Cope with Computer
Crime
1. Diversification of Countermeasures
As the crime organizations impacting
national, social and economic values are
becoming more organized andsophisticated in their ability to use
information, the Information Society faces
future trouble. However, if we abopt a
policy that only channels provided by thecountry are allowed for international
information communications, and all such
communications are subject to censorshipin advance (as there is a possibility forinternational communications to damage
the nation’s interest), such passive
countermeasures will also be an obstacle
to the arrival of an Information Society
A c c o r d i n g l y, s u c h p a s s i v e
countermeasures should be the last resort
to protect out nation and society. It isnecessary to prepare various and generalcountermeasures from legal, technologicaland/or social aspects, in order to cope withthe challenge from adverse influences in
the Information Society.
2. Necessity of Unified Enactments
The Korean law to counter computer
crimes is primarily the Criminal Code. It

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is our nation’s basic law and does notfacilitate thorough practical research into
real cases of computer crimes. Therefore,
some main cases of computer crime could
be insufficiently covered by regulations orunder no regulations at all. Further, eachrelevant Ministry enacted its own special
law for each type of information crime,
which resulted in an unreasonableassessment of cases for punishment/
prosecution.

system of blocking such misconduct.
Further, we need to develop various andmultifunctional security technology andsystems e.g:(i) Abuse/misuse controlling technology
f o r S y s t e m S e c u r i t y To o l s i ncomputer communication networks;(ii) duplication protection technology;(iii) connection blocking technology;(iv) multi-user recognition systems; and(v) standardization of cryptosystems.

Typical examples are: the lack ofprovisions punishing illegal spying orillegal monitoring; lack of regulations on
attempt and conspiracy to commit an act
causing direct threat to public welfare; an
unbalance in punishment between the
Criminal Code and special laws;
jurisdictional disputes between
investigation authorities and judgement
authorities, and the warrant requirements
as a basic principle of the Criminal
Procedure Code.

4. Inter-Linked Research by Related
Institutions
In Korea, a person or an instituteinterested in computer crimes
independently research each field in theabsence of an inter-linked system forgeneral research into computer crimes.
However, an Information Society can be
secured and settled through general
research by investigating authorities,
research institutes and businessenterprises, and joint research from thenatural and social sciences.

Therefore, it is urgent to enact a generall a w, a p r o p o s e d C o m p u t e r C r i m e
Regulating Act which includes
countermeasures against all adverse
impacts of computer crime, resolution ofjurisdictional disputes and solves thewarrant requirement problem under the
Criminal Procedure Code when computer
crimes are spread out. In addition, the Act
would have to deal with new issues in the
Information Society, such as electroniccommerce, electronic funds transfer,admissibility and authenticity of electronic
evidences, and international cooperation.
3. Practical Measures
Since misconduct in communication
networks, such as hacking or phonephreaking, is likely to be directly connected
to criminal acts, it is urgently required todevelop a Realtime Intrusion Detection
System, or any immediate chasing system
for such misconduct, as well as a firewall

198

5. International Joint Research
The contemplated goals can be attained
only if computer crime research and thetraining and education of investigators areaccompanied by international cooperation.
Investigating authorities in each country
will have to gather, examine and compare
information about the extent of regulationand its impact, as well as technicalinformation on information crime in othercountries. Further, they should have a joint
discussion on the crimes committed in eachcountry and make efforts to cope together
with new crime techniques. Without such
efforts, developing countries in thecomputer industry might provide a hotbed
for computer crime when crime techniques
in developed countries are introduced.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
VI. CONCLUSION
Economic crimes are social evils which
distort the reasonable distribution of
wealth, and harm sound economic
development. With the development oftransportation and the gradual breakingof tariff barriers, all the countries aroundthe world are now advancing to one market
in which all countries are subject to thesame economic principles. Thus somekinds of economic crime in one country may
cause other countries to be faced witheconomic damage.

From this standpoint, it is necessary to
make all efforts to develop investigation
techniques and prevention measures which
are suitable for individual countries. Whena certain economic crime may cause a bad
effect on other countries, or has somerelationship with other countries, it isnecessary for all related countries to carryout cooperative countermeasures. The
control of economic crime must be pursued
for the mutual interest of all concernedcountries.

APPENDIX ATABLE IECONOMIC CRIME OFFENDERS (NUMBER)
Types
Tax Evasion Punishment Act

Year
Reported
Indicted(Arrested)
Infringement of Intellectual Property Reported
Indicted(Arrested)
Illegal Cheques
Reported
Indicted(Arrested)
Credit Card Act
Reported
Indicted(Arrested)
Fraud
Reported
Indicted(Arrested)
Embezzlement & Beach of Trust
Reported
Indicted(Arrested)

1995
1,006
301
(61)
13,683
13,683(843)
109,719
23,224(7,099)
2,962
1,606
(569)
294,967
31,355(8,897)47,997
10,852(1,994)

1996
1,619
552
(105)
15,16615,166(1,106)
96,34725,427(7,504)
3,434
1,729
(576)
364,970
44,514(11,289)
51,324
11,815(1,990)

1997
2,756
803
(79)
13,46013,460(777)
79,82916,681(4,144)
3,565
1,614
(398)
37,52640,946(10,035)
47.023
10,938(1,652)199

RESOURCE MATERIAL SERIES No. 55

TABLE II
PC & INTERNET USERS (NUMBER)
PC units (thousands)
Internet Users (thousands)

1994
4,459
140

1995
5,349
370

1996
6,231
730

1997
7,214
1,090

1998
9,000 (Estimated)
2,190

TABLE IIIINVESTIGATION RECORDS BY YEARYear

No. of Case

1995(Apr. - Dec.)
1996
1997(Jan.-Aug.)
Total

21
72
47
140

No. of InvestigatedAllegations
45
146
72
263

(Arrested)
(12)
(24)
(39)
(75)

TABLE IVINVESTIGATION RECORDS BY TYPE
Type

Cases

Forgery/alteration of private electronic records etc.
Business interference, such as destruction ofcomputer/eletronic records
Home banking fraud
Mis-issue of ID/ID usage fraud
Terminal mis-usage fraud
Commercial communication network fraud
Credit card fraud
Computer network protection infringement (Hacking)Computer network processing information damage
Mis-usage of private information by public instituteProduction/distribution of obscene CDs etc.
Others
Total

2
6

200

3
6
10
5
4
10
3
3
9
79
140

No. of(Arrested)
Investigatedallegations
4
(2)
17
(12)
3
51
20
5
5
15
5
10
9
118
263

(3)
(5)
(12)
—
(2)
(6)
—
(6)
(6)
(21)
(75)