Press Releases - Financial Services Commission

Press Releases

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Jun 03, 2022

Accounting Review Process to be Made More Expeditious and Transparent

The FSC introduced a plan to bring about improvements to the accounting review process with aims to prevent the prolonging of the review process and to ensure the protection of the right to defense for businesses undergoing scrutiny during the review process by the Financial Supervisory Service (FSS). The period of the review process will be one year in principle with a six-month extension allowed upon approval from Governor of the FSS for unavoidable reasons. To guarantee the right to defense for businesses undergoing scrutiny, improvements will be made to the contents of the prior notification form and the period for which businesses can access the QA document will be extended. Background An accounting review (or inspection) examines whether a companys financial statement and audit report have been prepared properly according to the relevant accounting and auditing standards. It is a supervisory function that seeks to protect various stakeholders such as investors and to encourage sound business management activities as well. Accounting review is an important aspect to bringing about innovation in capital markets and improving investor trust.Transparency in capital markets begins with the accuracy and promptness in the accounting information being disclosed and accounting review as a supervisory mechanism induces accurate accounting practices by businesses through identification and correction of inappropriate accounting information. In addition, under the principle-based IFRS system that recognizes diversity in accounting practices, accounting review provides guidance for businesses in conducting their accounting practices. The government has continued to make efforts to bring about improvements to the accounting review system since the accounting reform.With an introduction of the financial statement review system, the processing time for minor violations has been reduced considerably.The adoption of an adversary procedure during the review processhas helped to
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Jun 02, 2022

Debtor Assistance with Legal Representation and Litigation Services Available at Free of Charge

The FSC unveiled an overview of the current status on the use of debtor assistance with legal representation program on June 1. In 2021, a total of 1,200 victims of illegal private lending or debt collection activities applied for support in 5,611 cases and debtor assistance with legal representation was provided in 4,841 cases in total, which signifies that the debtor assistance program has become a crucial social safety net for damages inflicted by illegal private lending. The authorities plan to continue to make efforts to prepare for a rise in demand for remedies from illegal private lending by strengthening ties with various types of inclusive finance measures and securing sufficient fiscal resources, while working to stamp out illegal private lending by closely cooperating with investigative authorities. Overview Since January 28, 2020, the government has been offering the debtor assistance with legal representation programat free of charge to help victims of illegal debt collection activities done by both registered and unregistered money lenders and to support those that have fallen prey to exorbitant interest charges in excess of the maximum legal lending rate. When a victim of illegal private lending applies to seek support through the Financial Supervisory Service (FSS)s website or via a phone callplaced to the illegal private lending help center or the Korea Legal Aid Corporation (KLAC), attorneys from KLAC provide assistance with legal representation in dealing with illegal private lenders and for litigation services at no cost to debtors. (Legal Representation for Handling Debt Collection Issues) KLAC attorneys provide service of handling debt collection issues with creditors (money lenders) in place of debtors in order to help debtors avoid any harm caused by illegal debt collection activities. (Litigation Services) For damages incurred by exorbitant interest charges in excess of the maximum legal lending rate and illegal debt collection activities, K
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May 31, 2022

Supplementary Budget Approval at National Assembly to Expand Availability of Financial Support

The National Assembly passed the supplementary budget on May 29, 2022 which includes KRW1.7 trillion worth of financial support programs intended to help the self-employed business owners and small merchants experiencing difficulties due to COVID-19 and the vulnerable groups such as young adults and lower income groups. The financial support programs to help improve peoples living conditions consist of six main tasks worth about KRW1.7 trillion in total in the supplementary budget. - (a) KRW600 billion (plus KRW500 billion in in-kind contribution) in debt adjustment, (b) KRW680 billion in low interest rate transfer loans and (c) KRW220 billion in targeted support funds to help with the recovery of the self-employed business owners and small merchants and improve their competitiveness - (d) KRW15 billion in expanded supply of loans for young adults with low incomes and (e) KRW48 billion in special guarantees for those with lowest credit scores to help improve the access to financial services for vulnerable groups such as lower income households and young adults - (f) KRW109 billion in government-sponsored transfer loans to help ease the high interest payment burdens of non-speculative homeowners and improve the overall structure of household loans Key Details of Financial Support Programs to Help Peoples Livelihood I. Debt Adjustment Program for Small Merchants and the Self-employed a) Program Overview (Program Purpose) To support normal business operation and restart efforts of small merchants and self-employed business owners who have been experiencing difficulties in making loan payments due to losses accrued from the COVID-19. - Provide preemptive support to prevent deterioration in business foundation via sale of overdue debts or collaterals in the case that the level of business recovery is not sufficient for loan payment burdens. - Assist restart efforts of borrowers who have turned insolvent due to difficulties in making payments for abruptly increased debt.
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May 27, 2022

Government Approves Revision Bill to FSCMA for Introducing Business Development Companies

The government approved the revision proposal for the Financial Investment Services and Capital Markets Act (FSCMA) during a cabinet meeting held on May 26. The revision proposal introduces business development companies (BDCs), a new form of venture capital investment vehicle focused on investing in startups and innovative companies and which offer more cashability as they are listed on an exchange. BDCs will be required to invest at least a certain portion (e.g. 60%) of funds assets to startups and innovative companies and will be operated as closed-end funds, which will help companies to raise funds stably for a longer period of time. In addition, to allow investors to more easily liquidate their investment, BDCs will be operated as exchange-listed to enhance their cashability. The government expects that the introduction of BDCs will help (a) provide a more stable way of raising funds for early-stage businesses while providing retail investors an opportunity to diversify their investment into startups and innovative companies using an already established investment mechanism, (b) increase vitality in the economy by utilizing abundant market liquidity as venture capital and (c) promote sound investment practices on non-listed companies as BDCs will be operated by professional entities and will come under the purview of the FSCMAs regulatory framework. Background On May 26, 2022, the government approved the revision proposal for the FSCMA at a cabinet meeting with a goal of introducing business development companies, a new form of investment vehicle focused on investing in startups and innovative companies before they become listed on a major exchange. Key Details (Basic Direction) As a new form of investment vehicle, BDCs will be introduced in a way that incorporates the advantages offered by both publicly offered funds and private fundsapplication of an economy of scale and investor protection mechanisms offered by publicly offered funds and utilization of flexi
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May 24, 2022

Vice Chairman Speaks about Importance of Investor Protections in Meeting on Digital Assets

FSC Vice Chairman Kim So-young attended a meeting on the enactment of a law on digital assets with members of the National Assembly and officials from other relevant government agencies on May 24.The following is a summary of Vice Chairman Kims opening remarks. Vice Chairmans Remarks (Government Measures on Digital Assets) The government has been working on strengthening investor protections for digital asset transactions while providing support for innovation using blockchain technologies through an inter-ministerial approach.Starting from March 2021, the government has put in place a registration system for digital asset service providers through the revised Act on Reporting and Using Specified Financial Transaction and began to implement regulatory measures for anti-money laundering duties and investor protections. These measures were intended to minimize damages to users resulting from indiscriminate issuance of digital assets. Despite the need to further promote new and innovative technologies, however, there exist concerns about risks to investor protection and market stability as digital assets issued overseas are being traded in domestic markets without any regulations. (Future Plan on Digital Assets) As it has become evident from the recent crash of TerraUSD and Luna, the rapid growth of the newly emerging digital asset markets such as stablecoins and DeFi have spurred discussions globally about their impact on the stability of financial system, consumer protection and monetary and economic policies.In line with these discussions, there are currently thirteen relevant bills on digital asset investor protection pending at the National Assembly. Recently, the government has made building digital asset infrastructure and relevant regulatory framework as one of the key national policy initiatives and made an announcement accordingly. Some of the details of this policy task will include creating an environment where investors can invest in digital assets safely
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May 18, 2022

FSC Holds Financial Risk Assessment Meeting to Review Market Risks and Check Response Capability

The FSC held a financial risk assessment meeting jointly with the Financial Supervisory Service and the Korea Deposit Insurance Corporation on May 18 chaired by Vice Chairman Kim So-young to go over recent financial market situations and risks and check financial companies potential risks and response capabilities. Vice Chairman Kim So-young presided over the meeting and stated in his opening remarks that the current economic and financial conditions surrounding the Korean economy are not so favorable both internally and externally as this meeting was the first item on his schedule on the very first day of his tenure as the Vice Chairman of the FSC. Vice Chairman Kim urged authorities to maintain a sense of crisis and work with exceptional resolve as if potential risks in financial markets and system can turn up anytime amid rapidly changing financial environments. Moreover, to be able to respond to complex crisis in a timely manner, Vice Chairman Kim stated that the authorities will strengthen monitoring of financial markets while closely monitoring potential risks of financial companies and even the risks associated with the real economy such as the household and corporate sectors. Starting from today, Vice Chairman Kim emphasized that the authorities will work to make the financial market response system sturdier by maintaining close cooperation with relevant institutions while engaging in active communication with financial market experts. * Please refer to the attached PDF for details.
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May 11, 2022

FSC Approves Registration of Three P2P Financing Firms and Informs Users to Practice Caution

The FSC approved on May 11 the registration of The Asset Fintech Co., TGS Finance Co. and Ontwoin Co. for the operation of online investment-linked financial businesses (peer-to-peer or P2P financing business) as they satisfied the registration requirements specified under the Act on Online Investment-linked Financial Business and Protection of Users (the Act hereinafter). With the addition of three more entities, there are currently 47 registered P2P financing firms in total. For businesses that have already submitted their applications for registration, the FSC will promptly make decisions on their application review, and for those that have shown a potential of business closure, the authorities will seek measures to prevent damage to users. The FSC also said that users need to practice caution when using P2P financing and should beware of the following factors. First, users should note that there is no guarantee on principal investments and should refrain from investing in businesses that promise excessive rewards or have a record of lending excessive amounts to the same borrower. Second, borrowers need to check whether the interest rate and fee levels are in line with the maximum legal lending rate of 20 percent per annum which had been lowered since July last year. Registration of P2P Financing Business On May 11, three more business entitiesThe Asset Fintech Co., TGS Finance Co., and Ontwoin Co.have registered as P2P lending businesses with the FSC as they met the registration requirements specified under the Act. The registration of P2P lending firms under the Act is expected to help provide an enhanced level of protectionsfor P2P financing users and contribute to the improvement of credibility and sound developmentof the P2P financing industry in the future. Note for User Caution A. For Investors (No Guarantee on Principal Investments) P2P loans are highly risky products and do not guarantee collection of investments. When a borrower defaults on a loan, loss
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May 11, 2022

Household Loans, April 2022

The outstanding balance of household loansin all financial sectors rose KRW1.3 trillion in April 2022 as the decreasing trend seen since the beginning of this year came to a halt but staying at a stable level overall.The financial authorities will continue to closely monitor trends in household loans in order to help maintain its growth pace at a stable level and to prevent it from posing risk to the economy. (Overall) The household loan balance in April 2022 (up KRW1.3 trillion) edged up for the first time this year in contrast to a considerable drop observed in the previous month (down KRW3.6 trillion). However, the growth rate (up 3.1%, y-o-y) shows a continuing slowdown from the second half of the previous year. (By Type) Mortgage-backed loans went up slightly while other types of loans fell at a considerably slower rate, pushing up the total balance of household loans. Mortgage-backed loans in April rose KRW2.8 trillion, growing at a slightly slower rate compared to the previous month (up KRW3.0 trillion).Other types of loans edged down KRW1.6 trillion, declining at a significantly slower rate compared to the previous month (down KRW6.5 trillion), but keeping the trend of a slowdown from the end of last year. (By Sector) The balance of household loans edged up from the previous month in most sectors but the mutual finance sector (down KRW1.0 trillion) stayed on a downward trend due to a drop in non-mortgage types of loans. - (Banking Sector) The banking sector saw an overall increase of KRW1.2 trillion. Mortgage loans from banks rose KRW2.1 trillion, growing at a similar rate compared to the previous month (up KRW2.1 trillion).Other types of loans fell at a slower rate compared to a month ago (down KRW3.1 trillion), edging down KRW0.9 trillion as credit loans went down KRW0.5 trillion. -(Non-Banking Sector) In the non-banking sector, the household loan balance increased KRW0.1 trillion. Insurance companies (up KRW0.2 trillion), savings banks (up KRW0.3 trillion
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May 02, 2022

FSC Unveils Guideline on Securities Businesses Dealing with Fractional Investment

The FSC introduced a guideline on the recently expanding form of securities business dealing with fractional investment on April 28 in order to make available information about the applicability of the Financial Investment Services and Capital Markets Act (FSCMA) and things needed to be considered for business activities. Decisions regarding whether a fractional investment product qualifies as a financial security are determined on a case-by-case basis, taking into account various factors related to investments and transactions such as the contents of the contract and the terms of use in a comprehensive manner. Regardless of the method, formality or technicality in indicating the rights, decisions will be based on the actual contents of the indicated rights and the authorities will interpret and apply the rules in line with the purpose of the financial securities regulations. Business entities with a plan to issue and distribute fractional investment products that are considered as securities should abide by the FSCMA and all other relevant laws. However, a provisional regulatory exemption can be granted through the financial regulatory sandbox program when their innovativeness and necessity (utility) are particularly recognized and when they have established an investor protection system as well as a system for operating separate markets for the issuance and distribution of fractional investment products. Background Fractional investment is generally known as investing in a share of the ownership right for real-life assets, etc., and most investors perceive that they actually own a piece (fraction) of the ownership right through their investments. When investors have direct ownership,they can earn profits generated from the asset in possession and can exercise their rights including property rights regardless of the success or failure of the fractional investment business. The trading of real-life assets in this regard is not subject to financial regulations in pri
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Apr 27, 2022

Entry Barrier for Investing in KONEX Market to be Lowered Significantly from End of May

The FSC approved a set of revisions for the operational, disclosure and listing rules of the Korea New Exchange (KONEX) market and the listing rules of the KOSDAQ market during a regular meeting held on April 27. The revision is a follow-up to the measures to revitalize the KONEX market introduced in Januarythis year for the purpose of facilitating the growth of SMEs through capital markets. Key Revisions (Lowering Entry Barrier for Retail Investors) The revised measures abolish the minimum deposit rule requiring retail investors to deposit at least KRW30 million as well as the rule that requires investors to open up an exclusive account for small-sum investmentsfor making investments in the KONEX market. As such, retail investors will be able to invest in the KONEX market more at will. However, as the KONEX market is being regulated at a minimum level such as its rules on listing eligibility review, disclosure, etc., securities firms should notify investors who are new to investing in the KONEX market about the need to practice caution when making investments. (Facilitating Processes for KONEX-to-KOSDAQ Listing) In order to facilitate KONEX-listed companies to more easily move to KOSDAQ listing after going through a certain period of preparation, the revised measures partially ease the current financial requirements of KONEX-listed companies for being eligible for the fast track scheme.The revision also introduces new KOSDAQ listing tracks that are based on the KONEX-listed companys market capitalization and liquidity assessment but do not consider its financial conditions such as sales amount and operating profit. (Easing Rules on the Designated Advisor System)In order to help reduce burdens of KONEX-listed firms in maintaining their listing status and to promote KONEX market transactions, the revised measures limit the currently unending period required to have a designated advisor filing disclosure reports on behalf of the listed company to one year,thereby alle
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Apr 15, 2022

FSC Introduces Improvements to Cloud Computing and Network Separation Rules in Financial Sector

The FSC unveiled its plans to improve regulations on cloud computing and network separation in financial sectors on April 14. The financial industry has been raising concerns about difficulties in adopting and using new digital technologies as a result of excessive regulations on cloud computing and network separation. Therefore, in order to support the financial sectors efforts for digital transformation in a stable manner, the authorities have introduced a set of measures to improve regulations on cloud computing and network separation. On cloud computing, the changes will focus on (a) clarifying the scope (and types) of work that can make use of cloud computing, (b) overhauling the usage process to remove redundancies and similarities and (c) making a transition from the current prior reporting requirement to ex post facto reporting. On network separation, the uniform application of the network separation rules will be eased in stages starting with the development and test servers. Background The acceleration of digital transformation in financial services has been pushing up demand for new digital technologies such as cloud computing, big data analytics and artificial intelligence (AI). However, there have been continuous complaints from the industry that the current regulations on data security in the financial sector regarding cloud computing and network separation have been too strict, thereby hindering the adoption and use of new digital technologies. In order to address this issue, after taking into account various opinions from the financial industry,the FSC has prepared the measures for improving regulations on the use of cloud computing and network separation to promote digital innovation in the financial industry. Overview of Current Regulation on Cloud Computing and Network Separation I. Regulation on Cloud Computing (Usage Status) The financial sector has thus far been using cloud computingfor back office (non-essential types of work) purposes includi
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Apr 13, 2022

FSC Announces Screening and Licensing Plan for MyData Service Providers in 2022

The FSC announced this years screening and licensing plan for financial MyData service providers on April 13. The authorities will continue to provide support for innovative firms to enter the market in order to further promote the growth of MyData services as a key driver of growth in the financial industry. For consumer protection purposes, however, the authorities will strengthen pre-licensing control measures as well as post-licensing management. In order to provide more in-depth screening and consultation, the authorities will accept applications en bloc periodically at the end of every quarter and have them screened by external experts. Background MyData business came under the purview of the law with the revision to the Credit Information Use and Protection Act in February 2020 which aimed to strengthen personal data privacy and securityand ensure the stable provision of services.From an early stage, the authorities minimized the entry barrierto promote access of innovative firms while adopting a licensing system to help establish a sound MyData business ecosystem. Since the first batch of MyData service providers that were granted full license for operation on January 27, 2021, a total of 56 MyData service providers have been given full licenses with 45 MyData services being launched so far. However, there still exists demand for additional licensing by small-scale fintechs and financial companies. Therefore, after operating a taskforce composed of relevant experts,the authorities held discussions on MyData licensing plan for future as well as issues to consider for further screening and licensing. Screening and Licensing Plan for MyData Service Providers in 2022 The licensing requirements for new entrants will be maintained at the current level to promote a continuing provision of innovative services by new entrants that are equipped with creative ideas. Nonetheless, improvements will be made in the following areas for the purpose of consumer protection giv
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Apr 13, 2022

Household Loans, March 2022

The outstanding balance of household loansacross all financial sectors fell KRW3.6 trillion at the end of March 2022, continuing to show a steady decline as the pace of slowdown has picked up compared to the previous month (down KRW0.3 trillion).The balance of household loans in March grew 4.7 percent from a year ago, steadily declining from the second half of the previous year. By type, mortgage-backed loans in March increased KRW3.0 trillion,growing at a slightly faster rate compared to the previous month (up KRW2.6 trillion) but continuing to maintain the pace of a slowdown since the second half of the previous year. Other types of loans including unsecured loans fell KRW6.6 trillionled by the banking and mutual finance sectors, showing an accelerated pace of slowdown from the end of the previous year. By sector, the balance of household loans dropped KRW1.0 trillion in the banking sector as mortgage-backed loans went up KRW2.1 trillionbut other types of loans including credit-based loans fell KRW3.1 trillion.The nonbank sector saw a drop of KRW2.6 trillion, showing an accelerated rate of slowdown compared to the previous month (down KRW0.1 trillion) led by the mutual finance sectors. The trends in household loans continue to be on a stable path as the balance of household loans declined KRW3.6 trillion in March 2022 and fell considerably from the previous month. Although mortgage-backed loans increased KRW3.0 trillion, other types of loans including unsecured loans dropped significantly (down KRW6.5 trillion) due to increases in borrowing rates, an expanded application of the debt service ratio (DSR) rule on individual borrowers and a slowdown in housing transactions,leading to an expansion in the pace of slowdown in aggregate terms. The financial authorities will continue to closely monitor trends in household loans in order to help maintain its growth pace at a stable level. * Please refer to the attached PDF for details.
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Apr 01, 2022

FSC Approves Rules Change to Gradually Introduce Mark-to-Market Valuation on Corporate MMFs

The FSC approved a revision to the regulation on financial investment business at the 6th regular meeting held on March 30 for gradually introducing the mark-to-market valuation method on corporate money market funds (MMFs) and to check relevant preparation and implementation to facilitate a soft-landing of the mark-to-market method in the market. Background The mark-to-market valuation method on corporate MMFs is scheduled to take effect from April 1, 2022, which was introduced through amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and the regulation on financial investment business in March 2020. Although the mark-to-market valuation method is considered as the rule of the game in principle, prior to the amendments, the book value method was permitted on MMFs as long as the disparate rate in the market-to-book value is within 0.5 percent. However, when disparity in the market-to-book value widens, there is a possibility of causing an abrupt and large-scale redemption as the earlier the investor redeems his/her money, the higher valuation s/he will get on return. As such, the amendments have been introduced to bring about improvements by introducing and implementing the mark-to-market valuation method on corporate MMFs from April 2022. Some of the key changes include (a) making an exemption to allow the book value method on corporate MMFs with more than 30 percent of stable assets as prescribed by the regulation on financial investment business and (b) expanding the duration of corporate MMFs using the mark-to-market valuation method from 75 days previously to 120 days to promote a wider use. However, with a growing potential of rising volatility in short-term money markets recently, there have been calls for a need to introduce the mark-to-market valuation method in a step-by-step manner in order to prevent corporate MMFs from turning into potential risk factors. With the MMFs current preference for the bo
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Mar 31, 2022

FSC to Seek Gradual Normalization of Temporary Deregulatory Measures in Financial Sectors

The FSC held discussions on the current status and further plans for the temporary easing of financial regulations during its regular meeting held on March 30. The FSC reviewed the status on the 25 deregulatory measures and decided to grant a three-month grace period on the 7 deregulatory measures that are scheduled to expire at the end of March.After a review, considering the recently extended availability of the loan maturity extension and payment deferment program for SMEs and small merchants, the FSC decided to provide a three-month grace period on all 7 deregulatory measures and to take a two-pronged approach to normalization after the grace period expires by carrying out (a) a step-by-step normalization of the total liquidity coverage ratio (LCR) in the banking sectorand (b) an immediate rollback on the other 6 measures that are expected to place not much compliance burden on the financial sector. Background The FSC and the FSS have introduced the measures for temporary easing of financial regulations in response to COVID-19 in April 2020.The FSC has held decisions on these 25 temporary deregulatory measures including regulations on capital requirement, liquidity requirement and those relating to business operation over four regular meetings.Thus far, the temporary deregulatory measures have provided the financial industry with the capacity to actively implement the loan maturity extension and payment deferment for SMEs and small merchants hit by the COVID-19, while making a contribution both directly and indirectly to the expansion of capital flows to support the real economy via corporate lending. Need for Gradual Rollback Key Details The FSC decided that it is time to begin a gradual normalization of the temporary deregulatory measures as the size of total credithas grown and in order to be prepared for a potential default with these measures being in place for about two years. In its decision, the FSC also considered factors such as global interest rate hi
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Mar 24, 2022

Availability of Government-backed Lending Support for Small Merchants Extended

The FSC announced the extended availability of the government-backed lending support programs for small merchants on March 24 in light of the six-month extension of the maturity extension and payment deferment programs for SMEs and small merchants announced a day earlier. Background The government has been providing financial supports to small merchants who are in need of emergency funds through financial support programs based on fiscal expenditure and guarantees in the amount of about KRW36.4 trillion.With the spread of the coronavirus variants weighing down on the business condition of small merchants, lending institutions in the private sector reached a final decision to provide a six-month extension on the availability of maturity extension and payment deferment yesterday.In this regard, the government-backed financial support programs for small merchants will also be extended for those scheduled to reach maturity this year. Key Details For the small merchant interest rate support program introduced on April 1, 2020 (KRW2.4 trillion in balance) and is scheduled to reach maturity beginning from April this year, a one-year maturity extension will be provided to help induce a soft-landing of payment burdens with the preferential interest rate adjusted from 1.5 percent to 2.5 percent. For the consignment guarantee program for small merchants introduced on May 25, 2020 (KRW6.6 trillion in balance), an up to one year extension of the forbearance period will be provided to help ease the burden of principal payment on loans with a grace period ending in May this year. The temporary postponement (until maturity) of insolvency proceedingsincluding debt collection granted to small merchants who are undergoing business closure but are making principal and interest payments on business loans guaranteed by the Korea Credit Guarantee Fund will be available for six more months until the end of September this year. Expectation The extended availability of the government-backed
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Mar 24, 2022

Enforcement of Travel Rule on VASPs to Take Effect from March 25

The FSC announced that the enforcement of the travel rule on virtual asset service providers (VASPs) will go into effect from March 25, 2022 pursuant to the revised Act on Reporting and Using Specified Financial Transaction Information (the Act hereinafter).The travel rule aims to prevent money laundering activities using virtual assets by requiring VASPs to provide relevant information about users sending and receiving virtual assets when they are asked to transfer virtual assets to another VASP. Travel Rule Details (Travel Rule Application) The travel rule applies when a VASP transfers virtual assets worth KRW1 million or more to another VASP upon users request. (Information Types Period) When sending a virtual asset to another VASP, the originating VASP is required to provide the names of senders and receivers as well as virtual asset addresses to the VASP at the receiving end. The originating VASP is also bound to provide the resident registration number of the sender within three business days from the time of request when requested by the commissioner of the Korea Financial Intelligence Unit (KoFIU) or the VASP at the receiving end. (Information Storage) With the enforcement of the travel rule, VASPs are obligated to keep relevant user information on senders and receivers for five years from the time of termination of transactions, or face a fine of up to KRW30 million. (Inspection Supervision) When a violation of the travel rule is found, authorities may issue a caution, warning or corrective order to a VASP depending on the outcome of the inspection and supervision, along with a disciplinary measure on its employee. Note The travel rule under the Act applies only when a transfer of virtual asset occurs between VASPs. The pre-registration system that is currently being carried out by individual VASPs for moving a virtual asset to a digital wallet is an industry-level AML measure implemented on a voluntary basis. Unlike domestic VASPs, overseas VASPs are not b
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Mar 23, 2022

Maturity Extension and Payment Deferment on Business Loans Extended for Six More Months

FSC Chairman Koh Seungbeom held a meeting with the financial industry groups and state-backed financial institutions on March 23 and made a final decision to extend the availability of loan maturity extension and payment deferment for SMEs and small merchants for six more months until the end of September 2022. Current Situation Since April 2020, the financial industry has made available maturity extensions and payment deferments to SMEs and small merchants struggling through the coronavirus pandemic. Between April 2020 and January 2022, the total volume of loans (principal and interest) under these programs amounted to KRW291.0 trillion (or 1,165,000 cases).As of the end of January 2022, the balance of loans under these programs amounted to KRW133.4 trillion (or 704,000 cases). The maturity extension and payment deferment programs have contributed to the recovery efforts of SMEs and small merchants without businesses having to worry about their payment burdens. According to a survey conducted by the Korea Federation of SMEs in January 2022, some 80 percent of SMEs have indicated that these support measures have helped them. The measures to help ease the payment burdens of businesses after the program expiresand the measures to reinforce the debt structureare also currently being implemented seamlessly. About 54 percent (or KRW9.0 trillion) of loans under the payment deferment program (principal and interest) have completed one-on-one pre-consultation with financial institutions, and about one third of them (KRW3.0 trillion) have already begun making payments on loans. Background Despite extending the availability of maturity extension and payment deferment programs three times over the past two years,SMEs and small merchants are continuing to experience difficulties due to the spread of the coronavirus variants. In its decision to pass the supplementary budget on February 21, 2022, the National Assembly made an additional bipartisan comment to seek an additional ex
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Mar 21, 2022

2022 Global Money Week Held on March 21-27

The FSC announced that this years Global Money Week (GMW)will be held online from March 21 to 27 with aims to raise awareness on financial education. The GMW will feature a seminar on promoting financial education and offer both specific needs-based and participatory learning programs tailored to the needs of different age groups. * The Global Money Week is a financial education campaign launched by the OECD since 2012 and is held by member countries on a voluntary basis during the fourth week of March every year. Under the theme of Build your future, be smart about money, this years GMW will kick off with a seminar looking at the current situation with financial education and discussions on strengthening financial consumer protection and promoting financial education at schools. Moreover, both tailored and participatory learning programs will be available for different age groups from children to teenagers to workers to seniors to enable easy access to financial education for diverse types of consumers and allow them to gain proper knowledge and attitude on finance. During the opening session, FSC Vice Chairman Doh Kyu-sang delivered congratulatory remarks as summarized below. Vice Chairmans Remarks (Importance of Financial Education) The official theme of this years Global Money Week is Build your future, be smart about money. From gaining an understanding about the concept of money during our childhood to managing our assets and pension for retirement, finance is closely knitted to our daily lives throughout our lifetime. The changes taking place in finance and social structure also highlight the significance of financial education. As financial instruments are structured in more complicated ways and increasing life expectancy necessitates individuals to prepare for life after retirement, financial education should be available to help individuals to boost their financial capacity and prepare for future. (Financial Education Policy) In the aftermath of the global
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Mar 18, 2022

Government Prepares Measures to Address Cross-border Payment Issues amid Russia Sanctions

The FSC announced on March 18 that the government and the banking industry have prepared measures to facilitate cross-border payments of businesses and help provide financing support to the families of expats living in Korea due to the impact of financial sanctions on Russia. An emergency financial call center operated by the Financial Supervisory Service (FSS) received a total of 123 cases of inquiry as of March 17 and the payment issues for both companies and individuals were found to be the most prevalent topic of inquiry. After reviewing these issues, authorities found cases where delays or denials in payment transactions occurred even when dealing with a bank or an item not on the sanctions list as overseas intermediary banks avoid handling transactions related to Russia. Due to Russia placing its own sanctions, inbound wire transfers from Russia to Korea have become restricted, creating complications for expats to send money back home. Key Measures (Support for Speedy Payment Process) The government plans to help set up a provisional payment arrangement using Korean banks local subsidiaries (KEB Hana, Woori)in Russia, thereby minimizing contact with intermediaries. When a local subsidiary conducts a payment transaction, it will first make a deposit to its own account at a headquarter office located in Korea and then the trade payments will be offset from this deposit, thereby minimizing the burden of going through intermediary banks and speeding up the process. However, this payment arrangement is valid only for transactions with non-sanctioned banks and/or items and the non-trade-related payments between individuals are not subject to this arrangement. It needs to be noted that a further tightening of sanctions may bring a halt to this payment arrangement as well. The financial authorities and the banking sector are expected to introduce this provisional payment arrangement at the end of March after reviewing relevant laws and preparing the system. (Financing
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