FSS warns of zero tolerance

By Korea Herald

Regulator issues ultimatum to bank chiefs on malpractice

  • Published : Apr 15, 2014 - 21:14
  • Updated : Apr 15, 2014 - 21:14
The Financial Supervisory Service issued an ultimatum to the country’s major banks, warning that the executives and auditor in charge would be held responsible for any future financial misconduct.

“Should such financial scandals continue to take place, we will hold responsible the executive and auditor in charge,” FSS Gov. Choi Soo-hyun said Tuesday in an emergency meeting with local bank chiefs.

“No tolerance will be shown of those who conceal a financial irregularity or even delay the related report.”

The FSS summoned the meeting just the day before in a move that caught the banks off-guard. More importantly, industry watchers said the conference reflected the gravity of the crisis, as the nation has been hit with a string of scandals involving data leaks and compliance breaches. 
Financial Supervisory Service Gov. Choi Soo-hyun on Tuesday held a meeting with the chiefs of local banks in which he stressed that the top management of financial institutions would be held accountable for malpractice. (Yoon Byung-chan/The Korea Herald)

“(The banks) should repent and seek to establish fundamental ways to prevent the recurrence of such accidents,” Choi said.

To make this goal possible, he demanded that internal maintenance meetings be chaired by bank presidents themselves. Financial companies found responsible for large-scale accidents will be subject to a full-time audit system, the FSS chief added.

The bank chiefs in turn presented preventive measures and plans for improving the current security system, according to FSS officials.

Almost all the executives were from banks that have been involved in recent financial scandals.

KB Kookmin Bank, Woori Bank and the Industrial Bank of Korea are currently under investigation for allegations of an illicit loan taking place at their Tokyo branches. Two officials ― one from Kookmin Bank, the other from Woori Bank ― have so far committed suicide amid the ongoing probe.

Hana Bank was involved earlier in the 300 billion ($288 million) loan fraud by an employee of KT ENS.

Standard Chartered Bank Korea and Citibank, the two leading foreign-based banks here, were found to have leaked the personal information of a combined 130,000 customers.

“(The banks) should repent (for the continued scandals) and establish fundamental measures to prevent the recurrence of such accidents,” Choi said.

“Unlike in the past, we will take the utmost measures for any future misconduct by financial companies, including high-level penalties for the chief official in charge,” said Vice Gov. Cho Young-jae, who chaired the meeting.

By Bae Hyun-jung (