Real name system

The Real name system (실명제/實名制) refers to a policy requirement that any transaction shall be conducted under a real name.

In Korea, doing real property transactions, financial transactions or on-line posting of one's opinion on a big portal service provider shall be performed under a real name by relevant laws. The real name system in real property transactions and financial transactions is expected to contribute to the sound economic order. However, the Internet real name system will be implemented no longer as the statutory ground was ruled as unconstitutional by the Constitutional Court in August 2012.

Key words
real name system, real property transactions, title trust, financial transactions

Real name property transactions
The real name system in real property transactions requires the rights on the real property including ownership shall be registered in the name of the actual exclusive right holder under the Act on the Registration of Real Estate under Actual Titleholder’s Name (부동산 실권리자 명의등기에 관한 법률) enacted in March 1995 and enforced on July 1, 1995. The Act allowed a grace period up to one year until June 30, 1996 during which fictitious titleholders' names might be converted to those of the actual titleholders.

Until then title trust agreements, under which the title of real estate could be registered under the name of a third party, had been usually made between the parties of real estate. The actual titleholder prevented the third party title holder from using or dispose the real property for his/her own profit by means of public notarized or internal agreements between them. Actually such title trust agreements were performed for the purpose of speculation in real estate and tax evasion.

The above-mentioned Act prohibits altogether the registration of ownership of real estate under the name of a third party based on the title trust agreement. Any title trust agreement on real estate is null and void. Any registration of title transfer after the grace period expired on June 30, 1996 is subject to penal punishment of imprisonment up to five years and surcharge up to 30 percent of the price of real estate.

Also any transaction in violation of the Act shall be punished and additional tax will be levied.

There are some exceptions to the real name system in the real property transactions:
 * trust registration based on the Trust Act;
 * fiduciarty transfer of tilte for the purpose of discharge of obligations based on the Provisional Registration Security Act (가등기담보법); and
 * real property owned by a family clan (종중/宗中).

Real name financial transactions
Real Name Financial Transaction System, all of a sudden enforced on August 3, 1993, sought to ensure that financial transactions are conducted under real names. It meant that no one could open bank accounts without disclosing his or her name and resident registration number. Until the early 1990s financial transactions of large amounts between private parties had usually been conducted under false names or pseudonyms to protect the confidentiality of such transactions and to evade tax as well.

In 1993, President Kim Young-Sam suddenly proclaimed his Emergency Presidential Order on Real Name Financial Transactions and Protection of Confidentiality. The newly-elected President Kim sought a clean image by enforcing the conduct of all financial transactions under real names. It was believed that former Presidents Chun Doo-Hwan and Roh Tae-Woo had concealed their slush funds under false names or pseudonyms. If concealed financial transactions could be exposed by means of the real name transaction system, a remarkable increase of tax revenues should result. This regulation aimed at keeping the underground economy under tight control by making all transactions subject to taxation. The Presidential Order was transformed into the Act on Real Name Financial Transactions and Confidentiality (금융실명거래 및 비밀보장에 관한 법률) in December 1997.

The real name financial transaction system required everyone to submit such certificates as the resident registration card, driver license or passport evidencing his or her real name before completing transactions with financial institutions. The subsequent surveillance effect was bigger than expected. In November 1995, ex-Presidents Chun and Roh were convicted and jailed for accumulating and concealing huge slush funds while in office and violating the Presidential Order.

The act prevented banks and other financial institutions from informing third parties (for example, creditors, tax collectors, investigators, and so on) of any financial transaction involving banks, savings, securities companies and insurance companies without a request or the consent of the data subject. There are some exceptions where personal information is required under subpoena or warrant, or required by law for a tax inquiry under tax laws, etc.

Internet real name system
On August 23, 2012, the Constitutional Court ruled unanimously that the real name requirement imposed on big portal service providers by relevant statutes Article 44-5 (Authentication of On-line Bulletin Board User) of the Act on Promotion of Information and Communications Network Utilization and Data Protection, etc. (정보통신망 이용촉진 및 정보보호 등에 관한 법률)
 * (1) Any person who falls under any of the following subparagraphs shall take such necessary measures as provided for by the Presidential Decree regarding the user authenticaion method and process (hereinafter referred to as "Authenticaion Measures) so as to operate on-line bulletin boards.
 * 1. omitted
 * 2. Information Communication Service Providers (ICSPs) whose typical service are regularly used by more than 100 thousand persons daily on average, and who satisfy the standards as specified by the Presidential Decree.

Article 29 (Authentication Measures) of the Enforcement Decree of the Act
 * The "necessary measures as provided for by the Presidential Decree" in other parts than each Subparagraphs of Article 44-5 (1) shall mean all of the following Subparagraphs: 
 * 1. To secure any method to authenticate the user of the bulletin board by requesting Certified Authentication Agencies pursuant to Article 2 x of the Digital Signature Act (전자서명법) and other third party or administrative agencies who provide authentication services, or by using facsimile or face-to-face confirmation;
 * 2. To secure technologies to prevent the authentication data from being leaked or hacked when employing the authentication procedure and maintaining such authentication data; and
 * 3. To maintain the authentication data for the period from the date of posting messages on the bulletin board to the date when six months passed from the closing of such posting.

Article 30 (Scope of ICSPs required to take Authentication Measures) of the Enforcement Decree of the Act
 * (1) "Any person who satisfies the standards as specified by the Presidential Decree" as stated in Article 44-5 (1) ii of the Act shall mean the Information Communication Service Provider whose services are regularly used by more than 100 thousand persons daily on average during the preceding three months as of the previous year. 
 * (2) omitted is unconstitutional, such provision is in violation of the principle of less restrictive alternative (과잉금지의 원칙) and freedom of speech (표현/언론의 자유) of both users as well as ISPs in the cyberspace, and the self-determination (자기결정권) of personal information.

As a result, the so-called "Choi Jin-sil Law", which was enacted in 2007 right after a celebrity's suicide caused by malicious comments on the Internet bulletin board, is to be discarded. A petition filed by "Internet Media Today," an online media company, among others in 2010, claimed that the law was discriminatory.

Until now, Websites with more than 100 thousand visitors per day required users to authenticate their identities by entering their resident registration numbers when they used portals or other sites.

The Constitutional Court said, "The system does not seem to have been beneficial to the public. Despite the enforcement of the system, the number of illegal or malicious postings online has not decreased. Instead, users moved to foreign Websites and the system became discriminatory against domestic operators. It also prevented foreigners who didn’t have a resident registration number here from expressing their opinions online."