FSS uses AI to link scattered loan complaints, tracking 'masterminds' of illegal lending

Oct. 26, 2026. The Fair Economy — The Financial Supervisory Service (FSS) has built an artificial intelligence (AI)-based analysis system to support investigations into organized illegal private lending, drawing on the vast troves of data it has accumulated to go after masterminds that case-by-case responses could not reach. The system's core function is to piece together scattered victim reports to uncover the true identity of criminal organizations that had been hidden behind "tail-cutting" — severing ties with low-level operatives to avoid detection. Investigators confirmed multiple cases in which a single organization had targeted numerous victims over time, as with "Manager Lee," the subject of a consumer alert issued in March.

The FSS announced on Oct. 26 the results of its AI analysis of approximately 380,000 records, including victim complaints, tips, grievances and illegal financial advertising information. The analysis revealed a large number of previously buried victims and detected signs that formally registered lending companies had participated in illegal operations.

Illegal finance syndicates operate in a decentralized manner. Because victims report at different times and through different channels, crimes committed by a single organization inevitably end up being treated as separate incidents. This shows that responding to reports on a case-by-case basis alone has limitations in tackling organized crime.

The new system finds connections between seemingly unrelated cases, weaving multiple incidents into a single picture and reconstructing them at the organizational level. This makes it possible to grasp the full structure of the crimes and those behind them in three dimensions. Using the system, the FSS confirmed multiple cases in which a single organization had targeted numerous victims over time. It also newly identified the channels the gang used to lure in victims, and plans to hand over the evidence it has gathered to police to support the arrest of key members.

Cases have also emerged in which registered lending companies were directly linked to illegal advertisements and victim complaints, a new pattern that manual work had failed to detect. Some firms repeatedly appeared in multiple victim complaints and illegal ads, using the trust of the regulated sector as a shield while participating in informal lending operations behind the scenes. The FSS has narrowed down dozens of registered firms with high potential for violating the Lending Business Act and is conducting interviews with victims and on-site mobile inspections. Joint crackdowns with relevant agencies are also planned.

It has also been confirmed that 'division-of-labor' organizations that separately handle advertising, lending, collection, and sales are intertwined and operate together.

The FSS plans to share the evidence it gathers with relevant agencies to prevent any gaps in investigations of organizations it uncovers. It will also introduce its own large language model (LLM) to upgrade the analysis system, broaden the scope of investigative support, and improve the accuracy of identifying organizations. If the special judicial police for livelihood-related crimes, now under discussion in the National Assembly, is introduced, the FSS plans to apply the analysis system in the field so that investigations can target entire organizations rather than just low-level operatives.

The Financial Supervisory Service urges consumers to report illegal finance damage even if the amount is small. Since the received reports are analyzed together with other case records, even a single tip can become a clue to uncover the underlying organization. When reporting, consumers should submit evidence such as conversations with the operator, transfer records, phone numbers, and advertising screenshots, and should retain the materials even after the transaction is completed.

Even if a lender is officially registered, consumers should report it if it separately demands upfront interest in cash or refers them to another lender. The same applies if the contract states a normal interest rate but the amount actually disbursed is less than the principal. Reports can be filed through the one-stop illegal private lending victim report service on the FSS website or by calling 1332.

Illegal finance damage reports are increasing each year. According to data obtained by Son Myeong-su, a Democratic Party member of the National Assembly's Committee on Political Affairs, the number of reports and consultations at the damage reporting center increased from 10,913 in 2022 to 17,538 in 2025. The growth rate is about 61% over three years.

According to data from the office of Rep. Kim Hyeon-jeong of the Democratic Party, reports of high-interest-rate harm from January to August this year totaled 4,681, more than 2.4 times the 1,904 reports filed in all of last year. From 2022 to 2025, reports of unregistered lending rose from 4,617 to 9,293, and reports of abusive debt collection rose from 1,109 to 4,280.

The government announced measures to eradicate illegal finance at a cross-agency task force meeting on October 2. The measures include incorporating online lending advertisements into pre-screening, introducing rewards of 5,000 won (about $3) for each illegal advertisement report and 500,000 won (about $350) for each report of illegal finance-linked business operations, and reviewing the application of undercover investigations. The government plans to amend the Lending Business Act and related regulations during the fourth quarter of this year.

Investigative authority is also a point of contention. Jeon Hyeon-hui pointed out that if the FSS sends a warning to stop debt collection, lenders may realize they have been reported and destroy evidence. Lee Chan-jin, head of the FSS, explained, "That is a major reason for launching the Special Judicial Police for Livelihood." The main targets of the FSS's Special Judicial Police Task Force for Livelihood Finance are expected to be violations of the Lending Business Act, such as loans exceeding the statutory maximum interest rate of 20% per annum and unregistered lending businesses.

"Manager Lee" was known to have provided high-interest loans at an annual rate of 6,800% and conducted illegal debt collection against family members when repayments were delayed, according to the March consumer alert.

However, concerns were raised during a National Assembly audit that the FSS has limits in tracking how victims first come into contact with illegal lenders. Rep. Jeon Hyeon-hui of the Democratic Party pointed out at the National Policy Committee's audit on Oct. 19 that the FSS only tallies the number of reports and consultations, without data on how victims were drawn in or what caused the harm. Governor Lee responded, "When consulting with victims, we will also investigate the causes in parallel."