[Solution] Aiming at ‘LH, prestigious schools, tax evasion’... What are the punishments and countermeasures for false transfers?

In the past, fake transfers were considered just a means of getting children assigned to a specific school district. However, recently, it has turned into a serious crime aimed at economic gain, such as real estate fraud or tax evasion. In fact, the number of fake transfer cases discovered by the Seoul Metropolitan Office of Education last year was 102, an increase of about 70% in five years, and related crimes are on the rise, with fake transfers accounting for more than 70% of real estate fraudulent subscription methods.

Attorney Kang Dae-hee of Daeryun Law Firm emphasized, “False residence registration is a clear violation of positive law, and it is difficult to avoid criminal punishment if you think complacently and react hastily.” Below are related questions and answers.

Q1. How is ‘false transfer’ legally defined, and what is the punishment? What is the legal difference between a simple address mismatch and a ‘false residence’ that is subject to criminal punishment?

A: False moving-in refers to the act of falsely reporting a move-in as if you had moved for an unlawful purpose, even though you have not moved your residence according to the Resident Registration Act. According to Article 37 of the Resident Registration Act, it is a serious crime punishable by ‘imprisonment of up to 3 years or a fine of up to 30 million won.’ The key criterion that distinguishes between failing to change address due to a simple mistake and false residence, which is subject to criminal punishment, is ‘the presence or absence of an unlawful purpose.’ A crime is established when a clear intention to obtain benefits not permitted by law, such as a child's school assignment, real estate subscription, or tax evasion, is proven.

Q2. Through what channels and methods do the government or investigative agencies mainly detect false transfers?

A: In the past, we often relied on whistleblowing or civil complaints, but recently, detection systems have become quite sophisticated. The Ministry of Land, Infrastructure and Transport and local governments constantly monitor abnormal transactions through the Real Estate Transaction Management System (RTMS), and in particular, in areas where subscriptions are overheated, all winners are investigated to determine whether they actually reside there. In addition, it is detected by analyzing the actual living base using big data such as health insurance premium payment history, credit card usage records, and communication records.

Q3. I know that there are many cases of false transfers for purposes such as assigning children to ‘prestigious school districts’, applying for real estate, or tax avoidance. Recently, for what purpose have disguised transfers become a major problem?

A: False transfers for school district purposes still exist, but recently, fake transfers related to real estate speculation are overwhelmingly common. The purpose is mostly to increase the subscription points for apartments in the metropolitan area or overheated speculative districts, or to obtain special supply qualifications given to residents of specific areas. In addition, false transfers for the purpose of tax avoidance, in which a false address is transferred to a house where one does not actually reside in order to receive exemption from capital gains tax on one house per household, are also treated as a serious problem.

Q4. There are cases where the line between living in a different place due to employment, etc. and clearly illegal moving in under false pretenses is unclear. What is the most important criterion to legally distinguish between the two?

A: According to the Supreme Court precedent, when the address on the resident registration and the actual residence are different, the standard for distinguishing between legality and illegality is where the ‘substantial basis for living’ is. For example, if a couple spends a weekend as a couple due to work or temporarily stays in another area due to their children's studies, there is a high possibility that the base of living is at the original address where the family is. However, regardless of the location that is the center of family, social, and economic activities, if the address is moved solely for the purpose of obtaining specific benefits, this clearly constitutes a disguised transfer. In the end, the ‘purpose and intention’ of address transfer becomes the most important criterion for judging legitimacy.

Q5. If you are suspected of false registration and are under investigation, what is the first thing the suspect should do? Can the level of punishment be lowered if the crime is voluntarily reported or the period of actual residence is short?

A: First of all, you should avoid making hasty statements and get help from a legal expert to organize the facts. Attempting to unconditionally deny the charges or destroy evidence may result in unfavorable results. Voluntarily reporting a crime serves as a very important sentencing reduction factor during the investigation and trial process. In addition, if you can prove with objective data that the period of false registration is relatively short and that the actual benefits obtained through it are not significant, you can increase the likelihood of receiving leniency such as a fine or probation.

[Law Leader Reporter Son Dong-wook twson@lawleader.co.kr]

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[Solution] Targeting 'LH, prestigious schools, tax evasion'... Punishment and countermeasures for false transfers (go here)