1. Reasons for Proposal

It is not currently possible to charge interest on false claims unless provided for in other statutes. However, this amendment prescribes the charging of interest by applying the “Act on Prohibition of False Claims for Public Funds and Recovery of Illicit Profits” and stipulates that additional monetary sanctions, which are currently waived entirely if an unlawful beneficiary voluntarily reports a false claim regardless of whether the administrative authority was already aware of the false claim, shall be only partially waived if the administrative authority was already aware. It excludes penalty surcharges that are imposed in lieu of business suspension from the scope of reduction of or exemption from additional monetary sanctions, and newly inserts provisions on criminal punishment of persons who make false or excessive claims. It also encourages reports of false claims by clarifying the grounds to apply for relief funding, and otherwise addresses and improves upon a number of weaknesses that have emerged from the operation of the current system.

2. Major Provisions

A. Prescribe that interest shall not be charged when recovering incorrect payments (Article 8 (1))

B. Exclude national/public schools as well as central administrative agencies and local governments, etc. from the scope of unlawful beneficiaries (subparagraph 8 of Article 2)

C. Charge interest on false claims by applying the “Act on Prohibition of False Claims for Public Funds and Recovery of Illicit Profits” if another statute contains provisions on recovering false claims but does not prescribe the charging of interest (Article 5 (3))

D. Decrease reductions and waivers of additional monetary sanctions when false claims are reported voluntarily (Article 10 (1))

E. Reduce or waive additional monetary sanctions when a penalty surcharge has been imposed, but exclude penalty surcharges in lieu of business suspension from the scope of reduction of or exemption from additional monetary sanctions (Article 10 (2))

F. Prescribe grounds for reporters, etc. of false claims who have suffered damage or paid expenses to apply for relief funding (Article 23 (3))

G. Prescribe that an application for a monetary reward shall be submitted within three years of becoming aware of the finalization of the legal relationship (and within five years of the finalization of the legal relationship) (Article 23 (4))

H. Prescribe grounds on which a local government or public institution may be required to reimburse a monetary reward paid by the Anti-Corruption and Civil Rights Commission for a false claim reported in relation to the local government or public institution (Article 24 (1))

I. Prescribe that a person who has made a false claim shall be punishable by imprisonment with labor for up to ten years or a fine of up to 100 million won, and a person who has made an excessive claim shall be punishable by imprisonment with labor for up to five years or a fine of up to 50 million won (Article 30-2)