South Korea's National Tax Service has launched an irregular tax audit into Meritz Securities after spotting suspected tax evasion. With tax probes continuing in the financial sector after those targeting Hana Financial Group and Hana Bank, there is speculation the scope could widen across the industry.

The Investigation Bureau 4 of the Seoul Regional Tax Office recently sent investigators to Meritz Securities' headquarters in Yeongdeungpo district in Seoul to secure accounting and other materials needed for the audit, the financial industry said on May 11.

Investigation Bureau 4 handles irregular, not regular, tax audits. It is often deployed when suspicions such as corporate tax evasion are detected, and is sometimes called the "grim reaper" in business circles.

The tax agency is reported to have begun the probe after confirming signs of tax underreporting by Meritz Securities. Meritz Securities underwent an on-site inspection by the Financial Supervisory Service in 2024 over allegations it used its dominant position to receive excessive fees during the extension of project finance loans.

A former executive was also sent to trial on allegations that, while in office, he obtained an illegal loan worth about 100 billion won from another financial institution in the name of real estate investment funds for a family company. The former executive received a prison sentence in a first trial on Jan. 1.

The audit comes three days after the tax agency launched irregular tax audits on May 8 targeting Hana Financial Group and Hana Bank. The financial sector is therefore watching the possibility that the tax authorities' probes could expand across the wider financial industry.

The tax agency said it cannot confirm information related to tax audits of individual taxpayers in connection with the probe.