Twenty years have passed since Korea introduced a real-name financial transaction system. On Aug. 12, 1993, President Kim Young-sam issued a presidential order prohibiting individuals from engaging in financial transactions in other people’s names.

The ban was revolutionary at the time, as many people carried out financial transactions under borrowed names to conceal their assets.

For the past two decades, the real-name system has played a significant role in making Korean society more transparent and reining in collusive ties between politicians and businessmen.

Yet the system had one big loophole from the start. It allowed people to open a bank account under another person’s name if they had his or her consent. This loophole has remained intact, helping unscrupulous businessmen and politicians create slush funds or evade taxes.

One latest example is Lee Jay-hyun, chairman of CJ Group, who was recently indicted on charges of embezzling millions of dollars of corporate funds. Lee was found to have parked his ill-gotten money in several hundreds of borrowed-name accounts.

In another example, the sons of former President Chun Doo-hwan were found to have opened bank accounts using the names of homeless people. Chun is suspected of having stashed away the illegal money he had received from businessmen during his presidency.

These examples highlighted the need to plug the loophole. They also provided fresh impetus to a move by a group of lawmakers to overhaul the present system in sync with the government’s war against the underground economy.

Some legislators have already put forward bills to revise the current law on real-name transactions. One proposal calls for making it impossible for people to claim the money they have put in an account opened under a borrowed name. The bill sees the money as belonging to the person under whose name the bank account has been opened.

Another proposal calls for meting out criminal punishment to people who have carried out financial transactions under borrowed names. Under the current law, opening a bank account using another person’s name, even without his or her consent, does not constitute an act subject to punishment.

It is punishable, however, if other criminal offenses were committed using such a bank account, such as evading taxes or concealing the proceeds of crime.

Regulating borrowed-name transactions is necessary, but it would be impossible to ban them across the board because there are many cases where using borrowed names is inevitable.

For instance, when parents want to open savings accounts for their kids, they have to use their kids’ names. And when a social club, such as a fan club for a pop singer, needs a bank account to collect membership fees, someone’s name has to be used as it is impossible to open an account under the club’s name.

If a blanket ban on borrowed-name transactions is not a practical option, lawmakers will have to find other ways to mend the system. One thing they are advised to do is to toughen the punishment for employees of financial institutions who allow their corporate customers to use other people’s names.

Currently the maximum punishment is a fine of 5 million won, which is nothing more than a slap on the wrist.