2020Du55282 Revocation of a request for disciplinary action

Nonghyup Bank Co., Ltd and two others

Law Firm LLC et al., Counsel for defendant-appellant

Attorney Kim Jong-soo et al.

Financial Services Commission

Law Firm Barun (LLC)

Attorney Choi Young-o et al.

Seoul High Court Decision 2020Nu46310 Decided November 5, 2020

2021.06.10

All appeals are dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Case summary

A. According to the reasoning of the lower judgment, the following facts are revealed.

(1) The Plaintiff Nonghyup Bank Co., Ltd. (hereinafter referred to as the “Plaintiff Bank”) entered into an agreement with the rice market and has performed the duties of receiving, paying, keeping, etc. cash other than the revenue and expenditure at the time of rice delivery.

(2) On August 25, 2006, pursuant to the above agreement, Non-party 1 (the death of January 19, 2007) deposited KRW 310,000 as a separate deposit in the Plaintiff bank. On January 12, 2015, the Plaintiff bank sent an official document to the Plaintiff bank to re-deposit the principal amount of the performance bond and its interest (hereinafter “the instant deposit”) in the account under Non-party 1’s name.

On the same day, Plaintiff 2 opened the account for fixed deposit (number omitted, hereinafter referred to as “instant account”) with Nonparty 1, at the request of Nonparty 2, who is a public official in charge of cash receipt and disbursement other than the revenue and expenditure in the city other than the revenue and expenditure on the same day.

(3) On June 18, 2019, the Defendant demanded the Plaintiff bank to take a disciplinary measure against the Plaintiff 2, pursuant to Articles 3 and 5-2 of the Act on Real Name Financial Transactions and Confidentiality (hereinafter “Act on Real Name Financial Transactions and Confidentiality”), on the ground that “the Plaintiff 2 did not perform the obligation to verify the identity of Nonparty 1, such as demanding the Plaintiff’s personal seal impression, real name verification certificate, and power of delegation when opening the instant account, and Plaintiff 3 was negligent in supervising the Plaintiff 2’s performance of the obligation to verify the identity as the team leader of the Bank and the branch office for the viewing of the Plaintiff.”

B. The lower court determined as follows: ① In light of the developments leading up to the opening of the instant account and the details of the application for transactions, etc., it is difficult to see that the deposit contract for the instant account (hereinafter “the instant deposit contract”) was concluded pursuant to the agreement between the Plaintiff bank and the Mayor of Seosan as part of the depository business prescribed in the former Local Finance Act, and it is consistent with the intent of the parties to the instant deposit contract, which entrusted the Plaintiff bank designated as a depository at the time of discussing the instant deposit deposit, which is cash other than the revenue and expenditure, as a part of the treasury business prescribed in the former Local Finance Act, to view that the parties to the instant contract are not Nonparty 1, but the parties to the instant contract. Therefore, insofar as the Plaintiff bank is a party to the instant transaction, it can be deemed that it has fulfilled the obligation of real name verification as long as it has gone through the real name verification process for the Plaintiff bank, which is the party to the instant transaction, and thus, it is difficult to see that there was an abuse of the party’s discretionary power to dispose of the instant account.

2. Whether the real name transaction obligation under the Real Name Financial Transactions Act is violated;

A. Article 3(1) of the Act on Real Name Financial Transactions provides for the Real Name Financial Transactions, namely, the real name, the name on the resident registration card, the name on the resident registration certificate, and other names prescribed by Presidential Decree (Article 2 subparag. 4). A financial company, etc. shall conduct financial transactions under the real name of a trader (Article 3(1)). A person shall not conduct financial transactions under the real name of another person for the purpose of concealing illegal property under Article 2 subparag. 3 of the Act on Report, Use, etc. of Specific Financial Transaction Information, money laundering under subparagraph 4 of the same Article, evasion of compulsory execution, and evasion of other evasion of law (Article 3(3)). A person who violates Article 3(3) shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding 50 million won (Article 6(1)). When the Financial Services Commission finds a violation of this Act by dismissing an employee of a financial company, etc., he/she may be subject to a dismissal under Article 3(3) of the said Act, suspension from office or reprimand (Article 6(2).).

B. Of the lower judgment, the part that deemed the party to the instant deposit contract as the time to discuss is acceptable in light of the relevant legal doctrine (see, e.g., Supreme Court Decision 2019Da267204, Dec. 10, 2020), but the part that deemed that there was no ground for disposition since it cannot be deemed that the trader violated the obligation to conduct financial transactions under the real name of the trader, and thus,

In light of the language, structure, purpose, etc. of the relevant provisions including Article 3 of the Act on Real Name Financial Transactions, given that the instant account was established in the name of Nonparty 1, who was already deceased, rather than the closing price, the Plaintiff bank, a financial company, cannot be deemed to have conducted financial transactions under the real name of the trader. The same applies to cases where a local government, for the convenience of business management of cash other than the revenue and expenditure for each payer, made the payer’s personal name indicated as the deposit account of the relevant account, or made it clear that the name of the goods of the relevant account falls under

Nevertheless, the lower court erred by misapprehending the legal doctrine on the real name transaction under the Act on the Real Name Financial Transactions and Guarantee of Secrecy, which determined that even if the instant account was opened under the name of Nonparty 1, not in the name of the party to the transaction, but in the name of Nonparty 1.

However, as seen below, the lower court was justifiable to have concluded that the instant disposition was unlawful because it deviates from or abused discretionary power, and eventually did not affect the judgment by the lower court.

3. Whether the discretionary authority is deviates or abused;

The lower court determined that the instant disposition was unlawful on the following grounds, even if the grounds for the instant disposition exist: (i) Plaintiff 2 and Plaintiff 3 violated the discretionary authority; (ii) based on Articles 4(2) and 6 of the former Regulations on Handling of Government Money Deposits (amended by Ordinance of the Ministry of Strategy and Finance No. 703, Dec. 28, 2018); (iii) joint bank proposals prepared by the Federation of Banks; (iv) Plaintiff Bank’s process for handling Government Money Deposits; and (v) Article 8(1) of the Agreement on Handling of Treasury Money Operations between Plaintiff Bank and Husan City; and (iv) opened the instant account in order to manage the instant deposit by each payer upon the request of the Plaintiff Bank, and there was no unlawful purpose or motive in conducting such business affairs. ② In managing cash other than the revenue and expenditure as a fixed deposit, there was no specific provision or guidelines to demand the payer’s personal seal impression, real name verification certificate, and proxy certificate; and (v) the financial authorities also did not deal with the instant business affairs before the instant payment order.

Examining the reasoning of the lower judgment in light of the relevant legal doctrine, the lower court did not err by misapprehending the legal doctrine on deviation and abuse of discretion, contrary to what is alleged in the grounds of

4. Conclusion

The Defendant’s appeal is dismissed in entirety as it is without merit, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Noh Jeong-hee

Justices Kim Jae-hyung

Justices Lee Dong-gu