This is a composite scenario, drawn from situations that arise in Korean criminal practice and adapted for illustration. It does not depict any specific case or client.
The transfer that the year-end audit flagged
A finance manager sent from headquarters had run the Korean subsidiary’s accounts for three years. When cash ran short before a quarter closed, he moved money between the company account and a related entity to cover a supplier, then moved it back — the way, he thought, everyone did it. Nobody objected at the time. Then headquarters replaced the country manager, an outside audit went through the ledgers, and a line item came back marked as unexplained.
Weeks later he received a call from a police station asking him to attend as a suspect. The word used was hoeryeong (횡령) — embezzlement. His first reaction was the one most people have: “But the money went back. Nothing is missing.”
That instinct is understandable, and it is also where a great many foreign executives and employees in Korea run into difficulty. Under Korean law, whether a criminal offence was committed is not decided by whether the balance was eventually restored. It is decided by the character of the act at the moment it was done — and by which of two closely related offences, embezzlement (횡령) or breach of trust (배임), the facts fall under.
Two offences that look alike — and why the difference matters
Both offences punish a betrayal of trust that damages another person’s property, but they have different subjects and different objects.
Embezzlement arises where a person who is keeping another’s property appropriates that property or refuses to return it (Criminal Act Article 355(1)). Breach of trust arises where a person who administers another’s affairs commits an act in violation of their duty, thereby obtaining a pecuniary benefit or causing a third party to obtain one, and causing loss to the principal (Article 355(2)).
In practice the starting point is the object. If what is at issue is a specific item of property — company cash, goods, a vehicle — embezzlement is the natural fit. If it concerns a pecuniary benefit that is not tied to a specific item — a contract signed on terms that damage the company, a security interest granted without authority — breach of trust is the one in play.
| Embezzlement (횡령) | Breach of trust (배임) | |
|---|---|---|
| Who can commit it | A person keeping another’s property | A person administering another’s affairs |
| What is taken | A specific item of property held for another | A pecuniary benefit, not tied to a specific item |
| Core element in dispute | Intent to unlawfully appropriate | Standing as an administrator of another’s affairs; breach of duty; loss |
| Typical example | Withdrawing funds held for the company and using them outside their designated purpose | Signing an agreement on terms that shift value to a counterparty at the company’s expense |
The object is only a starting point. In a real file the prosecution and the defence argue about the custodial relationship, whether the person truly stood as an administrator of another’s affairs, whether a duty was breached, and whether loss occurred — and the same movement of money can be characterised either way. Which offence is charged is often itself the contested question, because the elements are not the same.
Not every broken promise is a crime — who counts as “administering another’s affairs”
For foreign businesses this is the single most important point, because it is where expectations formed in other legal systems diverge most sharply. In many common-law jurisdictions, a director who makes a poor commercial decision, or a counterparty who fails to perform, is dealt with through civil litigation. In Korea, a criminal complaint alleging breach of trust is a familiar feature of commercial disputes — which is exactly why the limits of the offence matter.
Those limits are not open-ended. In Supreme Court Decision of 14 November 2024, Case No. 2024Do13000, the Court restated the test for who can be a subject of breach of trust. To be “a person who administers another’s affairs,” the typical and essential content of the relationship between the parties must go beyond the ordinary opposition of interests found in a normal contract and lie in protecting or managing the other party’s property on the basis of a relationship of trust between them. The fact that the counterparty benefits when a debtor performs properly, or that there is an incidental duty to have regard to the other side in performing a contract, is not enough. The essential content of the contract must be the taking on of the other party’s property affairs with a degree of authority — as in a mandate.
On the facts before it, the Court set aside a conviction and remanded the case, holding that the lower court had not adequately established that the defendant stood in that position. The practical significance runs both ways: a failed deal and a resulting loss do not, by themselves, make out breach of trust, and mere non-performance of a contract remains a civil matter. Conversely, someone who genuinely managed another’s property on the basis of trust may find that acts outside that authority are assessed as breach of trust.
“I was going to put it back” — intent to unlawfully appropriate
The most common misunderstanding in embezzlement cases is the belief that returning the money resolves it. Korean courts approach the question differently, focusing on the moment of the act.
In Supreme Court Decision of 16 October 2025, Case No. 2023Do5329, the Court reaffirmed what an “act of embezzlement” means: any act that realises an intent to unlawfully appropriate. Where a person in possession of another’s property, intending to convert that possession into possession for themselves, performs an objective act by which that intent to appropriate can be recognised externally, embezzlement is established as to the property as a whole. The Court also declined to accept that a later disposal of the same property is automatically an unpunishable subsequent act for everyone involved, and remanded the case for further examination.
Two consequences follow for anyone managing company funds in Korea. First, the offence can already be complete at the point of the appropriating act, before the money is finally spent — which is why “it came back the following month” is not, on its own, an answer. Second, it is generally understood in Korean practice that using funds held for another outside their designated purpose may support a finding of intent to appropriate even where the person meant to repay later. The mirror image also holds: funds disbursed within genuine authority and for their proper purpose are not embezzlement. The dividing line is authority and purpose, and it is drawn from the whole factual record — the nature of the funds, approval and delegation rules, and how the transaction was accounted for. That is a fact-heavy assessment, and it is rarely obvious from the outside.
How the penalty scales — the Criminal Act and the aggravated punishment statute
The statutory range moves in steps: whether the offence was committed in the course of one’s occupational duties, and how large the benefit obtained was.
| Category | Basis | Statutory range |
|---|---|---|
| Simple embezzlement / breach of trust | Criminal Act Article 355 | Up to 5 years’ imprisonment, or a fine of up to KRW 15 million |
| Occupational embezzlement / breach of trust | Criminal Act Article 356 | Up to 10 years’ imprisonment, or a fine of up to KRW 30 million |
| Benefit of KRW 500 million or more, but under KRW 5 billion | Act on the Aggravated Punishment of Specific Economic Crimes, Article 3(1)2 | Imprisonment for a limited term of 3 years or more (a fine may be imposed concurrently) |
| Benefit of KRW 5 billion or more | Act on the Aggravated Punishment of Specific Economic Crimes, Article 3(1)1 | Imprisonment for life, or for a limited term of 5 years or more (a fine may be imposed concurrently) |
“Occupational” here refers to holding another’s property or administering another’s affairs as one’s job or duty — which describes a finance lead, a director, or anyone entrusted with managing funds. Because the applicable statute changes once the benefit reaches KRW 500 million, how the amount of loss or benefit is calculated frequently determines the weight of the entire case, and it is regularly disputed. Attempts are also punishable (Criminal Act Article 359).
Admission, settlement with the injured party, and restoration of the loss can be meaningful sentencing factors. But where the benefit is large, the statutory minimum and the scale of the loss place real limits on how far mitigation can go — which is worth knowing before assuming that repayment will close the matter.
Where foreign executives and employees are exposed differently
The elements above apply to everyone. Several things nonetheless tend to fall harder on foreign nationals.
Group-company transfers. Movements of funds between a Korean subsidiary and its parent or an affiliate — cost allocations, intercompany loans, temporary funding — are ordinary corporate practice. They can also be examined after the fact for whether the Korean entity had authority, whether it suffered loss, and whether the internal approvals existed. Practices that were unremarkable at headquarters can look different when reconstructed from Korean corporate records.
Joint ventures and partnerships. Where a foreign investor and a Korean partner fall out, the boundary between contributed capital, distributable profit, corporate funds, and personal funds is often blurred, and consent to a particular use of money is disputed after the fact. These cases turn on accounting records, account movements, and internal approval trails, and expert analysis is frequently required — which is one reason they run long.
Residence status. A criminal case and an immigration outcome are decided separately. A pending investigation may be weighed unfavourably when an extension or a change of status is examined, and a final conviction — particularly one involving actual imprisonment — can become one of the grounds on which the immigration authorities consider a residence measure. This is a discretionary assessment made on the individual case, taking account of the offence, the sentence, the status held, and the person’s circumstances in Korea; it is not an automatic consequence of a conviction. For that reason the criminal defence and the residence question are best looked at together rather than in sequence.
Language and unfamiliarity. Investigations and hearings proceed in Korean, and internal documents, approval records, and accounting entries are usually in Korean as well. How the facts are organised into legal issues at an early stage tends to shape what follows — for the company considering a complaint as much as for the person under investigation.
Key takeaways
- Embezzlement targets a person keeping a specific item of another’s property; breach of trust targets a person administering another’s affairs (Criminal Act Article 355).
- Not every broken contract is breach of trust — the relationship must go beyond ordinary opposing interests and rest on trust in managing another’s property (Supreme Court, 14 November 2024, 2024Do13000).
- An act of embezzlement is any act realising an intent to unlawfully appropriate, and the offence may be complete before the money is finally spent (Supreme Court, 16 October 2025, 2023Do5329).
- Occupational cases carry up to 10 years (Article 356); once the benefit reaches KRW 500 million, the aggravated punishment statute applies and the range rises sharply.
- Immigration consequences are a discretionary, case-by-case assessment — not an automatic result of a conviction.
Frequently asked questions
What is the difference between embezzlement and breach of trust in Korea?
Embezzlement applies to a person who is keeping another’s property and appropriates it or refuses to return it. Breach of trust applies to a person who administers another’s affairs and, in violation of that duty, obtains a pecuniary benefit or lets a third party obtain one, causing loss to the principal (Criminal Act Article 355). The starting point is whether a specific item of property or a general pecuniary benefit is at issue, but in an actual case the custodial relationship, the standing as an administrator of another’s affairs, the breach of duty, and the loss are all examined together.
How severely are occupational embezzlement and breach of trust punished?
Simple embezzlement or breach of trust carries up to 5 years’ imprisonment or a fine of up to KRW 15 million (Criminal Act Article 355). Where the offence is committed in violation of occupational duties, it rises to up to 10 years’ imprisonment or a fine of up to KRW 30 million (Article 356). Where the benefit obtained reaches KRW 500 million, Article 3 of the Act on the Aggravated Punishment of Specific Economic Crimes applies: imprisonment for a limited term of 3 years or more for a benefit between KRW 500 million and KRW 5 billion, and imprisonment for life or for a limited term of 5 years or more for KRW 5 billion or more, with a fine possible in addition.
I moved company money but intended to return it. Is that still embezzlement?
It cannot be ruled out. The Supreme Court has described an act of embezzlement as any act realising an intent to unlawfully appropriate, established once an objective act shows that intent externally (Supreme Court Decision of 16 October 2025, Case No. 2023Do5329). Using funds held for another outside their designated purpose may therefore support a finding of that intent even where repayment was planned. Funds disbursed within genuine authority and for their proper purpose are not embezzlement. Because the answer depends on the nature of the funds, approval authority, and how the transaction was recorded, it is assessed on the whole record rather than decided in the abstract.
If a business partner fails to perform a contract, is that breach of trust?
Not by itself. In its Decision of 14 November 2024, Case No. 2024Do13000, the Supreme Court held that where parties stand in an ordinary contractual relationship of opposing interests, the existence of an incidental duty to have regard to the other side does not make a party “a person who administers another’s affairs.” Only where the essential content of the contract is taking on the other party’s property affairs with a degree of authority — as in a mandate — does a party become a subject of the offence. Simple non-performance is a matter of civil liability and is distinguished from breach of trust.
Can an embezzlement or breach of trust case affect my visa or residence status?
It can, but it is not automatic. Criminal proceedings and immigration measures are decided separately. A pending investigation may be considered unfavourably when an extension or change of status is reviewed, and a final conviction can become one of the grounds on which the immigration authorities consider a residence measure. That decision is discretionary and takes account of the offence, the sentence, the status held, and the person’s circumstances in Korea. Because of this, the criminal case and the residence question are best reviewed together.
If a company fund question has been raised, review it before it hardens
Cases of this kind rarely stay simple. The same transfer is read by the company as misappropriation and by the person involved as ordinary treasury management, and the facts themselves are contested from the outset. Whether an offence is made out at all, which of the two offences is in play, and how the amount is calculated are separate questions, and each of them moves the outcome.
Yeohae Law Office advises both companies considering a complaint over misused funds and individuals contacted as suspects, including foreign executives and employees of Korean subsidiaries and joint ventures. Related material on other property offences is available in our note on fraud charges in Korea and on trade secret protection, with general guidance for foreign nationals facing criminal proceedings in Korea and for foreign-invested companies. If a fund question has been raised at your company, or you have been asked to attend as a suspect, you are welcome to send the basic facts over WhatsApp or KakaoTalk, and we can look at where the real issue lies. In these cases the direction taken early tends to matter more than anything added later.
Pyoung-ho Kim (Kim Pyoung-ho), Attorney at Law, Yeohae Law Office
Korean attorney; passed the Korean Judicial Examination; completed the Judicial Research and Training Institute (43rd class). Recipient of the 2021 Outstanding Lawyer Award. Has handled 500+ cases across all practice areas since 2014. Yeohae Law Office, 16 Beopwon-ro, Seocho-gu, Seoul (Jeonggok Building, Suite 406).
This article is general legal information, not legal advice on any specific matter. Whether embezzlement or breach of trust is made out, and the outcome of a case, depend on the individual facts and evidence.
