Press Releases - Financial Services Commission

Press Releases

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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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Jun 09, 2021

KoFIU and Probing Institutions to Strengthen Monitoring and Inspection on AML Duties of VASPs

The Korea Financial Intelligence Unit held a meeting with eleven institutions tasked with probing virtual asset service providers for their AML requirements on June 9.At the meeting, the KoFIU and relevant institutions discussed ways to bolster inspection of VASPs use of fake and false name bank accounts and to strengthen AML supervision over financial institutions. (Strengthen Monitoring of Fraudulent Bank Accounts) As VASPs are required to register with real name bank accounts by September 24 this year, their use of fictitious bank accounts has become more prevalent. As local banks have begun to more tightly restrict VASPs from opening up new accounts for collection of money, the use of accounts opened at mutual finance firms and other small-scale financial firms has also increased. As such, the authorities will strengthen monitoring of fraudulent and inappropriate use of bank accounts by VASPs. Financial transactions through fraudulent and fictitious bank accounts will result in rejection of transactions and termination of accounts. In this regard, the authorities will also strengthen monitoring of suspicious account activities. (Conduct Comprehensive Inspections on Fraudulent Accounts) The relevant institutions will carry out comprehensive inspections on the fraudulent accounts operated by VASPs between June and September. In the future, the status on the use of fraudulent accounts by VASPs will be analyzed monthly and shared with relevant institutions. (Enhance Monitoring of VASPs) As the deadline is approaching for VASPs to register their business with the authority, there exists a greater risk of business closure. As such, the authorities will enhance monitoring of VASPs operating accounts as well as accounts used for collecting deposits. (Strengthen AML Supervision) The authorities will strengthen AML supervision and inspection over financial institutions in order to prevent fraudulent activities, such as inappropriate lending, embezzlement of funds, illicit
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Jun 08, 2021

Revision Proposal to the Enforcement Decree of Microfinance Support Act Sets Contribution Rates

The FSC announced a revision proposal to the Enforcement Decree of the Microfinance Support Act and relevant regulation on June 8 in order to prescribe specific contribution rates for financial institutions making contributions to the pool of microfinance funds as required by the revised Microfinance Support Act. For the purpose of expanding the pool of microfinance funds available to help ease burdens of lower income households and expand microfinance opportunities for individuals with low credit backgrounds, the revision proposal sets the common contribution rate at 0.03 percent of the balance of household loans for each financial institution. The types of household loans that are subject to the contribution requirement by some other legislation, microfinance loans guaranteed by the Korea Inclusive Finance Agency (KINFA) and government-backed loans for lower income households are exempted from the contribution requirement. The revision proposal also sets differential contribution rates of 0.5 percent to 1.5 percent on the balance of guarantees based on each financial institution's subrogationratefrom the previous year. - Over 150%: 1.50% per annum - Over 100% ~ Up to 150%: 1.25% per annum - 100%: 1.00% per annum - Over 50% ~ Below 100%: 0.75% per annum - Up to 50%: 0.50% per annum The revision proposal also established specific details regarding the management and organization of the microfinance support center under a joint management by KINFA and Credit Counseling Recovery Service. The revision proposal will be put up for public notice for forty days from June 9 to July 19, 2021. * Please refer to the attached PDF for details.
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Jun 03, 2021

FSC Announces Analysis on Stock Markets with Partial Resumption of Short Selling

With the partial resumption of short selling being in place for about a month, the FSC announced an analysis on stock market trends for the period of May 3 to June 2. During this period, stock prices moved in a similar pattern as global stock markets while domestic stock prices showed relatively stable movements compared to other markets. Although the average daily amount of short selling transactions rose somewhat, it appears that there exists no significant relationship between short selling and stock prices for the given period. The FSC and other relevant institutions will continue to closely monitor market trends while working to bring about transparency and fairness in the markets. Stock Market Trends As of June 2, KOSPI and KOSDAQs closing prices were up 2.4 percent and down 0.2 percent, respectively, compared to April 30, the last trading day before the partial resumption of short selling began. In May, global stock prices showed mixed trends with the possibility of tapering by the Fed amid price increases in the U.S. Asian stock markets moved in the same direction as global stocks while domestic stock markets showed relatively stable trends as corporate earnings improved and retail investors remained net buyers. In May, foreigners net sold KRW9 trillion but turned to net buying in the last week of the month. Due to concerns about a monetary tightening from the U.S., other Asian markets also experienced foreign outflows. Short Selling Trends During the one-month period from May 3 to June 2, the average daily amount of short selling transactions increased somewhat to KRW688.2 billion. However, considering the fact that the total transaction amount increased more than twice the level seen before the partial resumption of short selling began, the growth is not that considerable.Also, as the built-up demand for short selling begins to fade out, the growth in the amount of short selling transactions also shows a downward trend toward stability. During the one-mont
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Jun 02, 2021

Authorities Introduce Operational Guideline on the Suitability and Appropriateness Test for Investors

The FSC introduced an operational guideline on the suitability and appropriateness test for investors which will be put up for public notice from June 3 to June 22. Background Financial institutions selling investment products to customers are required to carry out a suitability and appropriateness test for investors based on the information provided by customers in order to sort out investment products that are considered to be inappropriate for them. With the Financial Consumer Protection Act taking effect in March this year, certain changes have been made to the suitability and appropriateness test. First, the scope of investor information that needs to be checked by financial institutions as well as the standards for the measurement of investors risk appetite and tolerance have become legally mandated through the Act.Second, financial institutions have become subject to monetary penalties if their employees are found to have engaged in fabrication of consumer data or evaded the duty to conduct a suitability and appropriateness test. However, in implementing the Financial Consumer Protection Act, certain aspects of the suitability and appropriateness test have been identified as sources of inconvenience for consumers. As such, the authorities have prepared an operational guideline to help remove the inconvenience and improve the sales process. Key Details of the Guideline I. General Principles a) The seller should explain to consumers the purpose of carrying out a suitability and appropriateness test in an easy-to-understand manner and clearly indicate to consumers what kinds of information are being requested. b) The suitability and appropriateness test for investors should be carried out in a consistent manner according to the standards prescribed by the relevant laws. c) The test results should be stored and maintained along with the justifying documents. II. Online and Onsite Test Use For consumers who have already obtained their suitability and appropriatene
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May 31, 2021

Authorities to Ease LTV Rules and Enhance Support for Rent to Help Strengthen Housing Ladder

The FSC announced its plan to ease the loan-to-value (LTV) rules on mortgage loans and expand support for rent payments while taking steps to ensure an effective implementation of the household debt management plan introduced on April 29.The following measures are aimed at expanding financial support available to lower income households as well as young adults and newly married couples who are in actual need of housing. I. Mortgage Loans a) The non-homeowners annual income qualification to be given a preferential consideration will be increased from the current level of KRW80 million to KRW90 million for married couples and from KRW90 million to KRW100 million for first-time homebuyers. b) The maximum value of homes for which the annual income qualified individuals may apply will be increased from the currently level of KRW600 million to KRW900 million for homes located in overheated speculative areas and from the current level of KRW500 million to KRW 800 million for homes located in the areas that are subject to price adjustments. c) The additional benefit of maximum 10 percentage points in LTV ratio will also be increased to maximum 20 percentage points. II. Support for Vulnerable Groups a) For young adults, the maximum loan amount available for rent deposit will be increased from KRW70 million to KRW100 million per borrower through a housing guarantee program offered by the Korea Housing Finance Corporation. b) The maximum jeonseamount for which jeonse loans can be issued with a housing guarantee provided by the Korea Housing Finance Corporation at low interest rates and fees will be increased from KRW500 million to KRW700 million for Seoul metropolitan areas and from KRW300 million to KRW500 million for other regions. The maximum amount of jeonse loan a household can receive will remain at the same level of KRW220 million. c) The maximum loan amount available per borrower for long-term mortgage loan offered by the Korea Housing Finance Corporation for homes val
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May 31, 2021

Tech Financing from Banking Sector Continues to Rise for Innovative SMEs

The FSC announced the tech financing performance of banks for the second half of 2020. Among large-sized banks, the IBK and KEB Hana bank raked high, while Kyongnam and Busan Banks showed outstanding records among small-sized banks. The result of banks tech assessment capability also shows that the total number of banks that have completed setting up their own tech credit evaluation systems and are fully capable of extending loans based on their own tech credit assessment also increased to nine as one more bank joined the rank. Tech financing has become an important channel to raise funds for innovative SMEs that have technological prowess and future growth potential. Since its introduction in January 2014, the outstanding balance of tech financing loans continued to rise to KRW266.9 trillion as of the end of 2020.With active participation from the banking sector, tech financing has become widely in use. More recently, tech financing has moved into intellectual property and movable asset-based lendingas well. The authorities plan to work on making improvements to the tech financing system to continue to provide support for innovative SMEs. To improve consistency and credibility of tech credit evaluation systems between banks and TCBs, the authorities will help establish a standardized tech evaluation model during the second half of this year. The authorities also plan to gradually phase in tech credit evaluation into a comprehensive credit rating model for businesses. * Please refer to the attached PDF for details.
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May 31, 2021

Open Banking Available from Credit Card Companies

The FSC announced that open banking service will be available from mobile applications of major credit card companies starting from May 31. Shinhan, KB Kookmin, Woori card companies will make their open banking services available from May 31, with Lotte, Samsung, Hyundai and Hana card companies expected to join from June to August this year. Open banking was launched in December 2019 and has become widely in use. It has attracted some 80.2 million users cumulatively with more than 146.6 million accounts registered as of May 24, 2021. With credit card companies now offering open banking services, consumers are able to check their account balances and make mobile money transfers by using mobile applications of credit card companies while checking their monthly credit card usage on a banking application. Credit card companies will need to offer a more integrated financial service platform that provides the function of balance inquiry and mobile money transfer beyond their traditional payment-related services. In a similar vein, banks will now be able to develop a more customer-oriented business model that offers analysis on spending patterns, etc. Beyond open banking, the FSC will pursue open finance, a mutual opening up of finance-related services by financial sectors and fintechs through standardized mechanisms. The authorities will continue to work on making improvements to open banking by exploring potential links to new services and other industries and seeking ways to expand open banking services and its functions. * Please refer to the attached PDF for details.
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May 29, 2021

FSC Chairman Delivers Opening Remarks at the Green Finance Special Session of P4G Seoul Summit

FSC Chairman Eun Sung-soo delivered opening remarks at the special session on green finance held on May 29. Please see below for the full text of the speech. I. Introduction Good evening, everyone. Good afternoon, Europe. Good morning, America. Welcome to the 2021 P4G Seoul Summit Special Session on Green Finance. The world is still in the midst of the Covid-19 crisis. Covid-19 is not an individuals problem, nor a regions or a countrys problem. It is the whole humanitys problem. Likewise, climate change is everyones problem. In this regard, P4G puts emphasis on the value of partnerships across all sectors. I hope P4G Seoul Summit can induce everyone to take part in climate action. II. Why Green Finance? Achieving carbon neutrality involves a fundamental restructuring of industry. This might require trillions of dollars across the world. Many countries including Korea, have announced large-scale fiscal stimulus under Green New Deal schemes. However, public finance alone cannot cover the scale of investment we need. MDBs and private sector investors need to get involved as well. In a different angle, the financial industry can induce companies to lessen their environmental impact by altering the lending or investing criteria. For example, BlackRock, the worlds largest asset manager, evaluates a companys ESG performance when making an investment decision. III. Progress of Green Finance Green finance has been rapidly taking root in the global financial market over the past years. By the end of 2020, around 3,000 institutional investors have joined the UN Principles for Responsible Investment. Globally, ESG fund assets are nearing $2 trillion. Also, quarterly issuance of green bonds has risen to $150 billion. South Korea is also actively stepping up efforts to promote green finance. Last year, the government pledged to double the share of funding for green projects in public financial institutions by 2030. We are also planning to gradually make ESG data disclosures manda
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May 28, 2021

Government to Strengthen Oversight on Virtual Asset Transactions and Improve Transparency

The government announced its plan to enhance supervision on virtual asset transactions at a taskforce meeting led by the Office for Government Policy Coordination on May 28. The measures introduced are aimed at strengthening efforts to prevent illegal transaction activities and improving transparency amid growing market size of virtual assets. The taskforce meeting also assigned specific tasks for each government authority and agency dealing with virtual asset transactions. With the revised Act on Reporting and Using Specified Financial Transaction Information providing a six-month grace periodfor current virtual asset service providers (VASPs) to register their business with the authority, the government will ensure an effective management over the registration process as well as ensuing risks both during and after the grace period. Key Measures I. Preemptive management during the grace period In order to encourage prompt and early registration from existing VASPs, the financial authorities will provide consulting on the registration and supplemental requirements, such as obtaining an ISMS certification, opening up a real-name checking account, etc. The KoFIU will promptly process applications for business registration as they come in to promote market reorganization with registered entities. To let market participants know in advance and help them prepare for the possibility of business closure, the authorities will let the public know the status of business applications being filed through relevant websites. The authorities will continue to share information about VASPs with the investigative authorities to help enhance the effectiveness of necessary investigations. As of May 20, about sixty VASPs appear to be in operation. Twenty entities have received ISMS certifications and four them are found to run their operation with real-name accounts as of May 27. The authorities will continue to closely monitor fraudulent activities by VASPs and ensure strict response.
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May 27, 2021

FSC to Host Special Session on Green Finance at the 2021 P4G Seoul Summit

The FSC will host a green future session on the topic of green finance at the 2021 P4G Seoul Summit at Dongdaemun Design Plaza on Saturday, May 29, from 20:00 to 22:00 (Korean Standard Time). The special session on green finance will be available for online live streaming for anyone who is interested in watching via official websites of the 2021 P4G Seoul Summit, FSC and their YouTube channels. The special session will feature discussions on the role of finance in fostering green recovery in the post-COVID-19 era. Speakers and panelists will include foreign dignitaries and experts from climate and finance-related international organizations and institutions, such as the UNFCCC, WEF, IFC, BIS, EIB, TCFD, GCF, GGGI and SP. FSC Chairman Eun Sung-soo will deliver opening remarks through which he will offer an outlook on the future tasks of global green finance efforts while calling for close cooperation from financial sectors across the globe to achieve carbon neutrality. In particular, Chairman Eun will introduce Koreas green finance policies that have been actively pursued by the government as it announced the 2050 carbon net zero goal last year. The special session on green finance will shed a new light on the important role of finance in responding to climate change. It will also help raise domestic financial sectors interest and participation in green finance efforts. For more details about the program, please see the attached reference material. * Please refer to the attached PDF for details.
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May 27, 2021

Internet-only Banks to Increase Credit Lending to Individuals with Mid to Low Credit Standings

The FSC announced a plan to boost internet-only banks credit-based lending to individuals with mid to low credit backgrounds from KRW2 trillion at the end of 2020 to about KRW4.6 trillion by the end of this year. Internet-only banks will gradually expand the proportion of their credit-based lending to those with mid to low credit standings with a goal of reaching more than thirty percent of their total balance of credit-based lending by the end of 2023. Internet-only banks will also seek to further improve their credit scoring systems to more properly evaluate individuals debt service capabilities based on more realistic customer data as well as alternative credit data. In this regard, the government will strengthen management and supervision over internet-only banks to ensure their implementation of the plan. * Please refer to the attached PDF for details.
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