violation of the Banking Act, 200 order 1664-1 (Separation)

A

Park Ho-young

Law Firm B (Attorney in charge)

March 17, 2010

The defendant shall be innocent.

1. Summary of the facts charged

The Defendant is a person working for the head of a loan division in the Jeon Chang-gun D Association located in Jeon Chang-gun. An executive officer or employee of a financial institution shall not divulge any information or data that he/she has become aware of in the course of performing his/her duties to the outside or use such information or data for any purpose other than his/her duties. Meanwhile, the Jeon Chang-gun District Prosecutors' Office issued a search and seizure warrant on September 30, 2009 with respect to F, etc., who is a public official of the Jeon Chang-gun District Court, in the investigation, and requested each financial institution to provide financial transaction information according to the above warrant from October 1, 2009 to the subordinate police officer of the same month. The Defendant at the above E Association around October 29, 2009, issued a copy of the financial transaction information request from the Jeon Chang-gun District Prosecutors' Office, and the Defendant requested the F to provide such information to the outside of the Public Prosecutor's Office or the Defendant not disclosed the information.

2. Determination

A. Relevant provisions

A person who falls under any of the following subparagraphs shall be punished by imprisonment for not more than ten years or by a fine not exceeding 50 million won:

1. Any person who violates Article 21-2 (Prohibition of Divulgence, etc. of Confidential Information) or any executive or employee (including any person who was an executive or employee of a financial institution) of a financial institution shall neither divulge any information or data that has come to his/her knowledge in the course of conducting his/her duties to an outside (including a major stockholder or a person in special relationship with the major stockholder of the financial institution) nor use such information or data for any purpose other than the purpose of conducting his/her duties:

1. The term “banking business” means a business of lending funds raised by bearing debts from many unspecified persons through the receipt of deposits and issuance of securities and other bonds;

○ Credit Unions Act

Article 1 (Purpose) The purpose of this Act is to contribute to the development of the local economy by improving the economic and social status of the members of credit unions through sound fostering of credit unions based on common bond, and by providing financial convenience to local residents.

Article 2 (Definitions) The definitions of terms used in this Act shall be as follows:

1. The term "credit cooperatives (hereinafter referred to as "cooperatives")" refers to non-profit corporations established pursuant to this Act in order to achieve the purpose provided for in Article 1;

2. The term "National Credit Union Federation of Korea (hereinafter referred to as the "Federation")" refers to a non-profit legal entity established under this Act with an aim of pursuing the common interest of unions;

3. The term "joint bond" means a unit that determines the qualification for the establishment of a cooperative and the membership thereof;

(3) The credit business division of the National Federation under Article 78 (1) 5 (c) (limited to domestic exchange business) and (d) shall be deemed to be one financial institution under Article 2 of the Banking Act and Article 11 of the Bank of Korea Act.

Article 9 (Joint Bond and Office) (1) The common bond of a cooperative shall be determined by the articles of association, centering on economic sphere, living zone, workplace organization, etc. In such cases, matters concerning the scope, type and change of the common bond shall be determined by the Presidential Decree.

Article 39 (Types of Business, etc.) (1) A cooperative shall carry out the business falling under any of the following subparagraphs in order to achieve its objectives:

(b)to provide loans to members;

(d) Representation of the State, public organizations, the Federation and financial institutions;

(e) Safekeeping securities, precious metals, and valuable goods for its members;

(f) Discount of bill;

(g) Issuance and management of electronic means for debit payment and the settlement of such payments under the Electronic Financial Transactions Act (in such cases, limited to cases where the business of the National Federation under Article 78 (1) 5 (g) is jointly conducted);

(h) Issuance, management, and sale of electronic means for advance payment and the settlement of such payments under the Electronic Financial Transactions Act (in such cases, limited to cases where the business of the National Federation under Article 78 (1) 5 (h) is jointly conducted);

2. Welfare services;

3. Mutual-aid business for its members;

4. Education for improving the economic and social status of union members;

6. Business entrusted by the State or a public organization or designated as a business of a cooperative by other Acts and subordinate statutes.

7. Projects incidental to those as referred to in subparagraphs 1 through 6.

Article 78 (Types of Business, etc.) (1) The National Federation shall carry out the business falling under any of the following subparagraphs to achieve its objectives:

5. Credit service:

(c) Domestic exchange and foreign exchange services for unions and their members, or business agency for the State, a public organization or a financial institution;

B. Whether the person constitutes a financial institution under the Banking Act

On the premise that the Defendant, who is an employee of the E-Union, is an officer or employee of a financial institution under the Banking Act, the Prosecutor asserts that the Defendant is based on Articles 66(1)1 and 21-2 of the Banking Act. The Defendant asserts to the effect that the G Cooperatives does not constitute a financial institution under the Banking Act, and thus, it is not subject to the Banking Act. Accordingly, the issue of the instant case is whether the G Cooperatives is a financial institution under the Banking Act.

Article 21-2 of the Banking Act provides that the purpose of this Act is to contribute to the stabilization of financial markets and the development of the national economy by promoting the sound operation of financial institutions, enhancing the efficiency of fund brokerage functions, protecting depositors, and maintaining credit order (Article 1). The subject financial institutions refer to corporations other than the Bank of Korea which regularly and systematically operate banking business (Article 2(1)2), and “the business of lending funds raised by bearing debts from many unspecified persons by receiving deposits and issuing securities and other bonds” with respect to banking business (Article 2(1)1). However, according to the Credit Unions Act, it is important in relation to whether financial institutions under the Banking Act are financial institutions.

Article 6(3) of the Banking Act only provides for a certain credit business sector, such as internal exchange duties, as a financial institution (Article 6(3)), and does not provide for the G unions themselves. Furthermore, the Credit Unions Act provides that the purpose of G unions is to improve the economic and social status of its members through sound fostering of credit unions based on common bond, and contribute to the development of the regional economy by providing financial convenience to local residents (Article 1). In addition, the Act defines non-profit corporations established under this Act as G unions (Article 2 subparag. 1), while the Act defines the type of business of G unions as one of its members in addition to the credit business with the collection of deposits and installment savings from its members and loans to its members, the Act provides for welfare projects, education for improving the economic and social status of its members, education for mutual aid business entrusted by the National Federation, business entrusted by the State or public organizations, or business incidental to the above business (Article 39(1)) to those who do not have any restriction on the use of credit unions as prescribed by the Presidential Decree.

3. Conclusion

Thus, the facts charged in this case premised on the fact that the defendant, who is an employee of the Association, is an employee of a financial institution under the Banking Act, is not a crime, and thus the defendant is acquitted by the first sentence of Article 325 of the

Judges Kim Jae-ho

1) For loans to non-members and discount of bills (hereinafter “loans, etc.”) 1/3 of the loans, etc. newly handled by the union during the pertinent business year;

(Article 16-2 of the Enforcement Decree of the Credit Unions Act).