The government is making efforts to reduce the underground economy while the government has taken ‘the establishment of tax justice like the legalization of underground economy, etc.’ as one of its priority policy issue in order to be born again as a ‘trusted government.’ Also, the Korea Institute of Criminology (KIC) has been carrying out ‘the empirical analysis and policy alternatives of the illegal underground economy of organized crime groups’ since 2014, while keeping pace with such a policy basis, and is trying to contribute to the establishment of social and economic justice by providing practical alternatives of criminal policy on the illegal underground economy.
However, the illegal market size as estimated by the studies carried out during the past 2 years is exceeding the size of KRW140 trillion even only for several related areas of illegal gambling, illegal entertainment business, prostitution and illegal loan sharking business. The size of the entire illegal market is expected to be much larger, but the illegal assets that are being redeemed annually are not exceeding the level of between KRW200 billion and KRW300 billion. In other words, despite the legal redemption systems that have been arranged for illegal incomes, it can be said that no more than the 1%~0.2% level of the entire illegal market is being absorbed in reality.
As such, committing a high income crime is not properly punished if it is not discovered, and even though such a crime is discovered and punished, if the reality will be that the crime income will not be substantially redeemed, the criminal can not help but think that there will not be anything to be lost. Hence, seeking a high income by committing a crime without any respect for the relevant law may be regarded to be quite natural. Therefore, in a situation where any criminal income redemption system has not been properly provided, if a policy for legalizing the underground economy will be promoted by force, the more criminals of such nature will conceal themselves into shady places.
Therefore, the key to absorbing the illegal underground economy to established institutions will be regarded to be the making of a dense and firm net that will be enough to screen out all possibilities for hiding any criminal income by means of constructing a criminal income redemption system. On such a premise, this study has paid attention to the organized criminal groups that constitute an axis of illegal underground economy, and has focused on the entertainment business, the prostitution and the loan sharking business that can be called their traditional income sources. While making a sharp distinction between the area for legalization and the area for severe punishment by means of identifying the operational reality of the underground economy that is surrounding organized criminal groups to the maximum extent, if a comprehensive policy alternative that will enable the taxation or complete redemption of their illegal incomes can be arranged, it is thought to be not an impossible thing to establish the law and justice through reducing the size of the underground economy.
Hence, this study has been carried out with the methodology and contents of the following.
First, as mot much of preceding studies were available, relative weight has not been placed much on literature study, and its results have been utilized to the extent of referring them to necessary parts. Instead, as for precedents, even the lower instance precedents have been surveyed and utilized, and newspaper articles and internet data have also been properly utilized. Again, the existing statistical data have been introduced in the 1st and 2nd paragraphs of Chapter 2 and the relevant Japanese laws by which gangster control systems have been prepared institutionally have also been translated and introduced in the 3rd paragraph of Chapter 2.
An analysis on our country’s legislative system as related to the illegal underground economy has been carried out on the basis of the relevant legislations and precedents, and the outcomes have been introduced in Chapter 3. However, not like the traditional legislative analysis that used to be made mainly by the interpretation theory, it has been carried out under the 3 targets of the identification of concept outline, the deduction of illegal criminal types and the possibility for redemption of criminal income and the criminal business has been approached with its focus placed upon the prostitution which is the illegal type of the highest illegality rather than the entertainment business which is the core business of any criminal organization. Also, not like the study subject, in analyzing the legislative system with regard to the prostitution, entertainment business and illegal loan sharking business, all of the organized criminal constraints have been excluded, and any organized criminal approach has been replaced by separately dealing with the punishment types of organized criminal groups.
Based on the questionnaire survey and in-depth interview survey regarding the illegal underground economy, which constitute the framework of this study, the areas of entertainment business, the prostitution and the loan sharking business have been analyzed separately by area, and the general matters as related to criminal organizations have been summarized in Chapter 4, while the specific matters by area have been summarized separately in Chapter 5 through Chapter 7.
The size estimation and economic characteristics analysis of the illegal underground economy by area have been summarized and introduced in Chapter 8. The market size has been estimated to be in the order of prostitution, illegal loan sharking business and illegal entertainment business, and to do this, the economic characteristics of each of the above have been analyzed. Finally, the policy alternatives that had been deduced by methodology or by researcher have been gathered by area or by issue and introduced in Chapter 9. In accordance with the agreement of the study team that any unified policy alternative would not be proposed by force, the conclusion has not been made in writing and replaced by an outline instead.
The policy alternatives regarding the illegal underground economy have been proposed as follows:
As an outline, the necessity of the so-called ‘underground economy legalIzation 2-track strategy’ has been proposed.
With regard to the entertainment business, 1) strengthening the surveillance of the National Tax Service against cash transactions and tax evasion behavior is necessary, 2) reviewing about levying a heavy tax upon entertainment bars, 3) strengthening the opening of the detailed entertainment expenses of enterprises, and 4) strengthening the control by the police, and these have been proposed.
With regard to the prostitution, 1) strengthening the investigation force of the investigation agents such as the police and the prosecution, 2) seeking control policies as customized to the local situation, 3) strengthening the surveillance through the cyber patrol, and 4) the necessity for blocking the minors’ entry into prostitution in order to prevent the prostitution from commercializing and to block human trafficking, and these have been emphasized.
With regard to the illegal loan sharking business, 1) control and punishment should be strengthened, 2) the co-operational system between local autonomous entities and investigation agencies should be strengthened, 3) when a loan is processed, the duty of a financial organization’s review should be strengthened, 5) the requirement for subscribing to the ‘everyone’s insurance’ should be strengthened, 6) the necessity for developing diversified financial goods in conformance with consumers’ needs, and these have been emphasized.
Besides the above, 1) fundamental improvements in the redemption system of criminal incomes are necessary, 2) punishment of criminal group organization should be utilized, 3) the necessity for expanding the measures for restricting the employment of those who were or are now members of any criminal organization, and these have been emphasized.