Press Releases - Financial Services Commission

Press Releases

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Jun 30, 2021

KoFIU Holds Meeting to Monitor Fraudulent Account Activities of VASPs

The Korea Financial Intelligence Unit held a meeting with relevant institutions on June 30 to review the progress of monitoring fraudulent accounts of virtual asset service providers and other AML requirements. The KoFIU has been carrying out comprehensive inspections on fraudulent activities and fictitious accounts held by VASPs and taking appropriate measures on those that have been detected for illegitimate activities. Upon detection, fraudulent accounts are being suspended for use and relevant information is shared with investigative authorities. In this regard, the authorities are also working on setting up a risk management system on VASPs across all financial sectors to facilitate the suspension of account transactions, suspicious transaction reporting and information sharing. As such, the KoFIU will continue to work on strengthening the risk management system in the future. With the deadline (Sep. 24) approaching for VASPs to register their business with the authority, there is a greater risk of VASPs closing their business with investors facing the risk of losing their deposit money. To help prevent embezzlement and damages to investors, financial institutions are asked to file STRs to the KoFIU immediately when detecting large amount transfers from VASPs deposit collection accounts. With regard to the AML duties of financial institutions, the KoFIU also called for stronger internal control measures to prevent money laundering and other illicit transactions through loan, investment and fund management sectors. * Please refer to the attached PDF for details.
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Jun 29, 2021

Indemnity Health Insurance 4.0 to be Available from July 1

The FSC announced the availability of indemnity health insurance 4.0 from July 1 with upgrades and improvements from the previous system. The indemnity health insurance 4.0 will offer a much more equitable premium payment system according to ones own needs and use of health care services, lower premium levels by about 10 to 70 percent compared with the previous services and provide those that are already covered an opportunity to easily switch to the newly available coverage plan. As the indemnity health insurance service first became available in 1999, about 39 million individuals as of the end of 2020 were found to be covered by indemnity health insurance coverage. With about 75 percent of the population using the indemnity health insurance service, it provides important social safety nets alongside the state-operated national health insurance (NHI) program. Key Details I. Lowering Premiums while Ensuring the Same Level of Coverage (Coverage) Indemnity health insurance 4.0 will provide the same level of coverage as previously available on most types of illnesses and injuries with the maximum coverage of about KRW100 million for both in- and outpatient services.However, in order to prevent moral hazard of excessive and unnecessary use and provision of medical services, out-of-pocket expenses and deductions for outpatient services will be increased. (Premium) Due to the increase in out-of-pocket expenses and outpatient deductions, insurance premiums will be significantly lower compared to the previous levels.Considering high levels of loss ratios, it is expected that premiums of newly available indemnity health insurance policies will be much lower in the future compared to the current levels. II. Improving the Premium Payment System (Non-covered Services) The current integrated management system for insurance coverage of both NHI-covered and non-covered services will be managed separately with differential premium rates applied to non-covered services plans. The in
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Jun 29, 2021

FSC to Promote IP Financing for Young Startup Entrepreneurs

FSC Secretary General Kim Tae-hyun attended the 3rd intellectual property-backed financing forum held on June 29 and delivered congratulatory remarks underscoring the progress of IP financing and its significance for young startup entrepreneurs. The following is a summary of Secretary General Kims remarks. The governments pursuit of financial innovation has led to remarkable improvements in promoting movable-asset backed financing. The total volume of movable-asset backed financing has surged from about KRW700 billion at the end of 2018 to more than KRW3 trillion within 2 years. In this period, IP-backed financing grew more than fourfold from KRW300 billion to about KRW1.4 trillion. Intellectual property enhances financing opportunities for startups. IP helps to raise companys value and provides a shield against technology theft. It also offers opportunities to attract investments for startups to grow and expand overseas. As such, the FSC has been working to promote IP financing along with relevant institutions in support of young entrepreneurs and startups. First, the government has helped to create an investment fund for IP financing in the amount of KRW500 billion for 2019-2022 to help with the financing needs of innovative firms. Second, the authorities have been working to provide more guarantees through IP financing, offering about KRW300 billion in guarantees to help innovative firms every year. Lastly, the government has been working to boost accessibility for young entrepreneurs in close coordination with startup incubators. Educational programs and other financial support are available for young entrepreneurs and startups through D-Camp and Fintech Center Korea. Todays forum will shed a new light on the importance of IP financing as a means to support young startup entrepreneurs. The FSC will continue to work on promoting IP financing in close cooperation with relevant institutions. * Please refer to the attached PDF for details.
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Jun 25, 2021

FSC Recommendation on Capital Management for Banks to be Expired as Scheduled on June 30

The FSC decided to let its recommendation on capital management for banks and bank holding companies expire as scheduled at the end of June.The following aspects were taken into account for arriving at this decision. a) Improvements in the real economy compared to six months ago with major institutionsincluding the Bank of Korea, IMF and OECDrevising up their growth forecasts for the Korean and global economy b) Domestic banks and bank holding companies demonstrating their financial soundness even as they have been injecting relief funds into the economy in the wake of the COVID-19 outbreak Improvements in banks loss absorbing capacities with their BIS capital ratios largely surpassing the threshold End of 2019 End of 2020 End of Q1 2021 BIS capital adequacy ratio 13.91% 15.00% 15.36% Loan loss provision for banks 112.1% 138.8% 137.3% c) All banks and bank holding companies passing stress tests carried out by the FSS in May-June 2021 d) Major economies, such as the U.S. and Europe, announcing their plans for easing banks dividend restrictions after passing stress tests amid economic recovery From July 1, banks and bank holding companies can decide their dividend payout policies on their own according to the relevant law and the rules set forth by the banking association. With the ongoing COVID-19 situation, the FSC and FSS will continue to closely monitor improvements in the real economy, financial market stability and the soundness of financial institutions and draw up appropriate measures when deemed necessary. * Please refer to the attached PDF for details.
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Jun 24, 2021

Suspension of Business Operation Extended for Optimus Asset Management

The FSC decided to extend the period of suspension of business operation for Optimus Asset Management for six more months from June 30 until December 29, 2021 in order to ensure a sufficient timeframe for investor protection measures. The suspension of business operation was first issued by the FSC on June 30, 2020 and has been extended once until June 29, 2021. The fund sellers have agreed to set up a new fund management company through collective investment which will take over and manage funds previously operated by Optimus Asset Management. It is expected that setting up a new fund management company will take about three to four months. In the meantime, the fund sellers will take remedial steps on their own to address damages inflicted on investors. With the plan for fund management in place, the authorities plan to take further steps in terms of the sanctions process for Optimus Asset Management in the second half of this year. * Please refer to the attached PDF for details.
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Jun 24, 2021

FSC Grants Final Approval for Additional MyData Business Entity

The FSC decided to grant a final approval for MyData business to Aiji Net, an AI-based insurance fintech company at its regular meeting held on June 24. Since its preliminary approval process, the authorities found that Aiji Net has taken steps to bolster organizational structure and set up a team tasked with consumer protection. At the meeting, the FSC also granted preliminary approval for six out of seven entities including Daegu Bank, Jeonbuk Bank, KB Capital, Kyobo Life Insurance, Shinhan Life Insurance and KB Insurance. The addition of three insurance companies that have passed the preliminary approval stage is expected to help diversify MyData service areas. The FSC will continue to process new applications for MyData businesses every month and promptly carry out the application review and approval process. * Please refer to the attached PDF for details.
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Jun 24, 2021

2021 Korea Fintech Week Brings About Tangible Outcome for Fintech Advancement

The 2021 Korea Fintech Week has attracted about 250,000 online visitors so far since its opening on May 26. The offline to online availability of diverse opportunities for exhibition, education, investment and employment has provided important venues for fintechs, financial companies, relevant institutions and individuals seeking jobs in the industry. Through offline IR events and virtual meetings, 29 fintechs were able to attract investments in the amount of about KRW133.7 billion. A total of 54 fintechs, financial companies and relevant institutions participated in the online job fair through which up to 175 individuals will be given job opportunities in fintech or finance sectors. In this years event, 39 foreign-based fintechs, financial companies and investors from 13 different countries participated in online exhibitions, which provided opportunities for global cooperation and overseas expansion. The Korea Fintech Week also featured many expert speakers providing latest trends in the global fintech industry and relevant policy issues. * Please refer to the attached PDF for details.
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Jun 23, 2021

Revision to FSCMA and Lower Regulations to Improve Investor Protection and PEF Management

The FSC announced revisions to lower regulations of the Financial Investment Services and Capital Markets Act in order to prepare for the implementation of the revised FSCMA that is scheduled to go into effect from October 21, 2021. The revision proposal will be put up for public notice for forty days from June 23 until August 2. The revised FSCMA and lower regulations will improve the overall framework on private equity funds while strengthening investor protections for qualified retail investors and increasing efficiency in PEF management. First, the current PEF classification system placing distinctions between the professional investment type and the management participation type based on the purpose of fund management will be changed to a new classification system of general PEFs and institution-only PEFs according to the type of investors. Second, investor protections will be strengthened for qualified retail investors while different regulations for professional investment type and management participation type PEFs will be integrated into a single regulatory framework to help improve efficiency in fund management. Key Details (Investor Protections) Under the new classification scheme, qualified retail investors are eligible to invest in general PEFs only and investor safeguards will be strengthened for qualified retail investors investing in general PEFs. (PEF Management Rules) The rules governing the management of both general PEFs and institution-only PEFs will be integrated into a single regulatory framework that is identical to the current rules on the professional investment type PEFs. The existing rules that are intended to prevent large companies from expanding their governance clout using PEFs will continue to apply to all PEFs. (Market Soundness and GP Supervision) Various measures will be put in place to ensure soundness of the general PEF market and enhance supervision over general partners. In this regard, a new rule on the cancellation of regist
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Jun 22, 2021

Government Approves Rules Change Requiring SIFIs to Draw Up and Submit Recovery Plans

The government approved a revision proposal for the Enforcement Decree of the Act on the Structural Improvement of the Financial Industry at a cabinet meeting held on June 22. The revision proposal requires systemically important financial institutions (SIFIs) to draw up their own recovery plans every year to be submitted to the Financial Supervisory Service for crisis management purpose. The FSC introduced this revision proposal in February of this year following the passage of the amended Act on the Structural Improvement of the Financial Industry by the National Assembly in December last year. The Act is scheduled to take effect from June 30 of this year. Key Details (Selection of SIFIs) The FSC should select SIFIs every year after considering their function, scale, ties to other financial institutions and influence on the domestic financial markets. In this regard, the selection of SIFIs will be confined to banks and bank holding companies. (Recovery and Resolution Plans) SIFIs will be required to prepare and submit their own recovery plans to the Financial Supervisory Service within three months from the day of being designated as a SIFI. The FSS will then immediately pass on their recovery plans to the Korea Deposit Insurance Corporation (KDIC) and be required to evaluate the recovery plans and file evaluation reports to the FSC within three months. At the same time, the KDIC will be required to draw up resolution plans and submit them to the FSC within six months. A deliberative body within the FSC will then decide on the final approval of both recovery and resolution plans within two months. In this regard, recovery plans should have been approved at a board meeting prior to being submitted and contain specific details about the role and responsibilities of board members and executives, major business areas, standards of determining crisis situations, specific crisis management measures, etc. The deliberative body within the FSC will be made up of an FSC com
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Jun 21, 2021

40-year Mortgage Loan and Financing Support for Non-homeowners to be Available from July 1

As a follow-up to the earlier announcementson boosting financing support for non-homeowners, especially among young adults and newly married couples, the FSC announced that 40-year home mortgage loans and greater loan support for renters will be available from July 1, 2021. (40-year Home Mortgage) 40-year mortgage loans will be newly available as part of the government-sponsored home mortgage loan programs that provide mortgage loans to lower income households at low and fixed interest rates. Young adults aged up to 39 years old and newly married couples (married for up to 7 years) are eligible to apply for 40-year home mortgage loans, which provide benefits of fixed interest rates over the entire lending period and no prepayment penalties after three years. The maximum lending amount for income qualified mortgage loans (including 40-year mortgage loans) will be increased from KRW300 million to KRW360 million beginning on July 1. (Financing support for Renters) The maximum loan amount for young adults (aged up to 34 years old) who are in need of support for rent deposit will be increased to KRW100 million per individual. It is expected that the increase in the maximum lending amount will help about 5,000 additional individuals annually. In addition, the Korea Housing Finance Corporations guarantee fees for jeonseloans will be reduced significantly to help ease financing burdens of lower income groups. Further Plan The previously announced planto increase the maximum jeonse amount from KRW500 million to KRW700 million for jeonse loans that are guaranteed by the Korea Housing Finance Corporation will go into effect in the second half of this year after preparing the data system and making changes to the relevant rules. In the second half of the year, the authorities will also look into ways to introduce longer term mortgage loans offered by private sector lenders. * Please refer to the attached PDF for details.
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Jun 17, 2021

One-stop Credit Card Reward Points Redemption Service to be Available from Payinfo.or.kr

The FSC announced that the one-stop credit card reward points redemption service will also be available from the Account Info website (www.payinfo.or.kr) starting from June 17. As the reward points redemption service became available on January 5 this year through the Account Info mobile application, the total amount of reward points that have been redeemed by users reached more than KRW200 billion in just about four months. In order to make this service more accessible to a wider range of groups including non-mobile users, a general web-based service will also be launched on June 17 at payinfo.or.kr.As such, the reward points redemption service will be accessible from personal computers as well as mobile devices. As of the end of May 2021, KRW203.4 billion in credit card reward points have been redeemed with the total number of applications standing at about 179.9 billion cases. In addition, the total amount of money that has been withdrawn from inactive or dormant accounts using the Account Info mobile app reached KRW18.21 billion at the end of May. In total, some KRW221.6 billion in credit card reward points and dormant/inactive account funds has been claimed by financial consumers. The authorities will continue to work on improving convenience for financial consumers. * Please refer to the attached PDF for details.
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Jun 17, 2021

FSC Proposes Additional AML Duties for VASPs

The FSC announced a revision proposal to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information on June 17. The revisions are intended to impose additional AML requirements on VASPs and clarify implementation details about the customer due diligence (CDD) and suspicious transaction report (STR) requirements. The proposal will be put up for public notice from June 17 to July 27 before moving on to further legislative steps. Key Revisions (AML Measure for VASPs) The problem of VASPs registering false information on their own networks for illegitimate activities including price rigging has been identified. Pursuant to the Act on Reporting and Using Specified Financial Transaction Information (the Act hereinafter), the Enforcement Decree will be revised to add an AML measure for VASPs, which restricts VASPs and their employees from handling or engaging in cross-trading of virtual assets that are issued by ones own exchange or by an entity that is deemed to be in a special relationship with the former as specified by the relevant law. This proposal is aimed at improving transaction transparency. (Clarification on AML Duties of Financial Institutions) Financial institutions are required under the Act to perform risk assessment on their clients as part of the AML duties. However, the current Enforcement Decree may be misinterpreted as to require risk assessment for the purpose of checking highly risky clients only. As such, the revision proposal clarifies this and states that financial institutions are required to perform risk assessment on all clients. This will also help encourage financial institutions to develop and operate a graded risk management system on a par with global standards under the FATF recommendations. (Verification of Corporate Client Identity) Financial institutions are required to confirm the legal name, date of birth and nationality of their corporate clients. However, there exist confusions as the curren
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Jun 16, 2021

Authorities Hold 1st Taskforce Meeting on Maximum Legal Lending Rate Reduction

The FSC and FSS along with the relevant industry groups launched a taskforce to prepare for the maximum legal lending rate reduction scheduled to take place in July this yearand ensure an effective implementation of relevant measures. At its kick-off meeting held on June 16, the taskforce discussed ways to improve rules on microfinance, credit businesses and mid-range interest rate loans in line with the change in the maximum legal lending rate. These measures are aimed at making sure the availability of financing opportunities for lower-income individuals and protecting them from predatory lending practices. The meeting also discussed plans to more closely monitor market situations to prevent illegal predatory lending practices and to operate a complaints team in order to provide tailored consulting and referral services for those in need. The taskforce will be operated through the following three teamspolicy inspection team, market inspection team and complaints team. * Please refer to the attached PDF for details.
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Jun 16, 2021

Authorities to Upgrade and Simplify Unclaimed Insurance Benefits Process

The FSC announced that the authorities are working on upgrading and simplifying the process of finding unclaimed insurance benefits with a goal to finish up upgrading the system by the third quarter of this year. When system upgrades become ready, insurance beneficiaries can search for unclaimed or dormant insurance benefits and make claims for disbursements at once on the same website (http://cont.insure.or.kr). The unclaimed insurance funds search website was launched in December 2017 to help beneficiaries find their unclaimed insurance benefits more easily. The FSC has also carried out a campaign to help more beneficiaries get disbursements by sending out letters to all insurance holders with unclaimed benefits since the end of 2017. As a result, the number and the amount of disbursements has increased significantly. In 2020, about KRW3.3 trillion in disbursements has been made out in more than 1.35 million cases. In 2021, the cumulative amount of disbursements has already reached KRW1.4 trillion in about 495,000 cases by the end of April. As there still exists about KRW12.6 trillion in unclaimed insurance funds, the authorities will continue to work on informing beneficiaries about their unclaimed benefits while making improvements to the unclaimed insurance funds search website. * Please refer to the attached PDF for details.
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Jun 15, 2021

Multiple Subscriptions Restricted for IPO Shares

The government approved the revisions to the Enforcement Decree of the Financial Investment Services and Capital Markets Act during a cabinet meeting held on June 15. The revisions (a) restrict retail investors from applying for multiple subscriptions for IPO shares, (b) increase the annual cap for issuing securities via crowdfunding and (c) introduce specific rules for financial investment companies credit extension to overseas branches. The revisions will go into effect from June 30, 2021, except for the provision on the restriction of multiple IPO subscriptions, which will begin to apply for securities reports being filed after June 20, 2021. (Restricting Multiple Subscriptions for IPO Shares) With the introduction of a more equitable share allocation method in last December, retail investors are given more opportunities for IPO share subscription. However, in IPOs with multiple lead managers, multiple subscriptions were made possible as retail investors could open up accounts at multiple brokerage firms and apply at each brokerage firm. This resulted in inconvenience for investors and heavy workload for brokers. As such, multiple subscriptions for IPO shares will be banned for retail investors. Brokerage firms will be required to check whether investors have applied for share subscriptions at other brokerage firms. Even when an investor applies for multiple subscriptions, share allocation will be made only on the first subscription. (Follow-up Measures to Promote Crowdfunding) The annual cap for issuing securities through crowdfunding will be increased from KRW1.5 billion to KRW3 billion. The authorities will strengthen supervision over the financial soundness of crowdfunding platforms by checking their capital requirement more frequently from once a year to once every month and shortening the grace period before withdrawal from one year to six months. (Financial Investment Companies Overseas Operation) Financial investment companies can extend credit to oversea
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Jun 14, 2021

Support for Vulnerable Debtors Extended until December 2021

The FSC and relevant institutions along with all financial industry groups agreed to extend the period of support available for vulnerable debtors hit by the COVID-19 until the end of this year. (Pre-workout Programs) The application period for pre-workout programs offered by individual lending institutions will be extended until December 31, 2021. Individual (non-corporate) debtors at risk of overdue payments (less than three months) on loans due to a decline in income levels amid the pandemic may apply for pre-workout program at individual lending institutions. The pre-workout program will offer a payment deferral on the principal for six to twelve months and an opportunity to readjust payment schedule after the period expires. (Debt Adjustment by CCRS) Debt adjustment programs offered by the Credit Counseling Recovery Service will be available on a regular basis. (Individual Debt Purchase by KAMCO) The application period for individual debt purchase program offered by the Korea Asset Management Corporation (KAMCO) will be extended until December 31, 2021. KAMCO will purchase unsecured debt accrued between February 1, 2020 and December 31, 2021. Both lending institutions and individual debtors are eligible to apply until the end of this year. * Please refer to the attached PDF for details.
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Jun 10, 2021

Online Education Program Offered on the Supervision of Financial Conglomerates

The FSC and FSS announced that the authorities will provide an online education program for the employees of non-holding financial groups from June 10 ahead of the newly enacted law on the supervision of financial conglomerates taking effect on June 30. The online live streaming education program was prepared to ensure thorough preparation for the implementation of the new law and make sure that the employees of relevant financial institutions have a clear understanding about the relevant rules and requirements, such as the self-assessment on capital adequacy, internal control and risk management and reporting and disclosure requirements, etc. The program will be available in two separate sessions on June 10 to 11 and June 17 to 18 for about 134 employees of 46 financial companies affiliated with the six major non-holding financial groups. In the process of implementing the new law on the supervision of financial conglomerates, the authorities will maintain close communication with financial institutions and make support available. * Please refer to the attached PDF for details.
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Jun 10, 2021

Household Loans, May 2021

The outstanding balance of household loansin all financial sectors fell KRW1.8 trillion from the previous month at the end of May 2021 (up 9.6% y-o-y). The household loan balance dropped KRW1.5 trillion in the banking sector and KRW0.3 trillion in the non-banking sector. All financial sectors (y-o-y): +8.5% (Mar 2021) +10.0% (Apr 2021) +9.6% (May 2021) By type, mortgage loans expanded KRW4.5 trillion in May, growing at a slower rate compared with the previous month (up KRW5.2 trillion y-o-y), due to an overall drop in housing transactions. Other types of loans including credit loans fell KRW6.3 trillion due to a large-scale refund of deposits taking place in the aftermath of the SKIET IPO subscription. The financial authorities will closely monitor trends in household loans and work for an effective and consistent implementation of the household debt management measures. * Please refer to the attached PDF for details.
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Jun 10, 2021

FSC Grants Preliminary Approval for Kakao Pay's Digital Insurance Business

The FSC decided to grant preliminary approval for Kakao Pays digital insurance business at its 11th regular meeting held on June 9. The authorities decided that Kakao Insurance has met all necessary requirements under the Insurance Business Act for the operation of an insurance business. This is the first time that the FSC is granting preliminary approval for digital insurance business to a new entrant (non-insurer). The FSC expects that Kakao Insurance can help improve consumer convenience and promote competition and innovation in the insurance industry by launching insurance products linked to digital technologies and platform services offered by Kakao. The addition of Kakao Insurance will also have a positive impact on promoting the overall non-life insurance market. Kakao Insurance can apply for the final approval from the FSC within six months from now after taking steps to meet the capital, human resources and infrastructure and facility requirements set forth by the relevant law. * Please refer to the attached PDF for details.
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Jun 09, 2021

FSC Grants Toss Bank Final Approval to Operate Digital Banking Business

The FSC decided to grant final approval for Toss Bank at its 11th regular meeting held on June 9. Toss Bank will begin its digital banking operation as soon as September this year after completing necessary preparatory works. Toss Bank is the third digital bank that will be launched in Korea after K Bank and Kakao Bank that gained approval from the FSC in December 2016 and April 2017, respectively. After a close examination on the entry requirements, the authorities found that Toss Bank has met all requirements needed to gain a final approval. However, in order to ensure a seamless progress for its business growth, the authorities introduced a condition that Toss Bank closely follow up with its capital increase plan until 2025. FSC Chairman Eun Sung-soo stated that the new digital banks addition to digital banking industry will help broaden consumer choice and increase competition and innovation in the financial industry. Toss Bank is expected to begin its operation as early as in September this year. The FSC and FSS will operate an on-site support team to ensure a smooth takeoff of the new digital bank. * Please refer to the attached PDF for details.
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