[Lee Jae-min] Lost in the regulatory jungle

LEE JAE-MIN

From the perspective of regulators, one common way of ensuring compliance with the law is to stipulate severe punishment in case of a violation, and to make provisions broad enough to encompass as many offenses as possible.

Apparently, this approach has shaped the Korean legal and regulatory regime for several decades. The result is a proliferation of statutes carrying criminal penalties, many of which are vaguely and broadly defined — a systemic phenomenon now widely called "overcriminalization."

Recent remarks by the justice minister are quite telling: "1,069 laws (of Korea) contain criminal penalty provisions, with over 17,300 individual violations (stipulated in respective provisions) subject to punishment," and "it is difficult to even tell what is and isn’t a crime."

Fittingly, the remarks drew national attention. If so, this phenomenon seems to pose a serious challenge to the "rule of law"; the ambiguities embedded within these dense penal provisions would leave ordinary people and businesses unable to discern the clear contours of regulatory boundaries. If anything, the threat of criminal penalties always stays at the back of their minds.

When it comes to ambiguity and vagueness, the "breach of trust" provision in the Korean Criminal Code has been at the center of national debate for many years. The line between legitimate business decisions and a criminal breach of trust remains notoriously blurry. Since these cases are highly fact-specific and context-dependent, few businesspeople can be entirely certain of their legal standing at the moment of decision-making.

Now, such a big-stick, wide-net approach raises a fundamental question of legal philosophy — the issue of absence or erosion of "mens rea," the foundational principle that criminal punishment requires a prior guilty mind. In other words, individuals must know in advance that they are doing something wrong.

Without this safeguard, regulators would end up criminally prosecuting people for unknowing or unknowable offenses. If matters come to that, any good faith efforts on the part of regulators notwithstanding, claims of selective punishment are bound to follow.

Foreign companies are feeling the pinch, too. The 2024 Investment Climate Statement for South Korea, issued by the US Department of State, lists criminal liability risks for businesspersons as one of the hurdles for investment in the nation. The report refers to holding "CEOs legally responsible for all actions of their companies," noting that "foreign CEOs (cite) this as a significant burden."

In its 2025 White Paper, the European Chamber of Commerce in Korea flagged a matching sentiment when it referred to "criminal penalties (appearing to be) excessive sanctions," "numerous criminal sanctions," "penalty provisions (needing revision) in a reasonable manner" and "vague and expanded definition." But their apprehensions do merit our keen attention.

The real trouble is that overpenalization carries severe practical risks, now more than ever. It stifles creativity. It does so because people and corporations hesitate to act when faced with legal uncertainty — they simply can’t afford the risk if it threatens criminal penalties. Here, thinking outside the box would become prohibitively costly. If so, the conventional regulatory approach creates a structural hurdle for countries — such as Korea — that are serious about nurturing creativity in preparation for a digital economy and an AI-enabled society.

When people know what they’re accountable for, what success looks like and which calls are theirs to make, they would use less energy and resources navigating stressful ambiguity and instead channel them into their core work — arguably the first step toward catalyzing creativity.

In the United States, Executive Order No. 14,294 (Fighting Overcriminalization in Federal Regulations) — issued by President Donald Trump in May 2025 — addresses a similar concern. The executive order directs US federal agencies to clarify which regulatory violations carry criminal penalties, confirm the necessary "intent" standards and consider civil enforcement options where practicable.

Likewise, recent experiments in the United Kingdom are instructive. Although confined to national security-related sanctions involving transactions with listed foreign individuals and entities, a May 2026 policy paper titled UK Government’s Strategic Approach to Sanctions Enforcement signals a shift in regulatory enforcement in the country.

The policy paper cautions against a criminal-penalty-as-a-panacea approach: While "criminal ... action (is) used for the most serious ... cases ... where ... criminal enforcement is most appropriate, (it) will not always be the best approach, and in some cases civil enforcement can be equally effective." It also highlights "simplicity, clarity and transparency" as essential elements for businesses navigating this complex web of regulation.

Evidently, several countries share Korea’s r…