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Mar 08, 2021
- KoFIU's Upgraded AML System Demonstrates Significant Improvements
- The FSC announced that the Korea Financial Intelligence Unit (KoFIU)s upgraded anti-money laundering system in operation since December 17 of last year has shown significant improvements in terms of its suspicious transaction data processing, data screening and analysis and information security. The KoFIU began to operate an upgraded AML system from December 17, 2020to improve efficiency in data processing in response to the increasing volume of reports the system handles. In this regard, the past two months of operation has shown that significant improvements were made as intended. First, the suspicious transaction report filing system has become more efficient. The number of financial institutions filing STRs to KoFIU through an exclusive security network has been expanded to 3,664 from 611 previously. As such, the STR filing rate via exclusive security network has almost tripled from thirty percent to eighty-eight percent, with the processing time per STR reduced by more than ten seconds. Second, the screening and analysis process has been made more efficient with the increased use of digitalization and automation in the work process. The volume of preemptive screening and analysis of suspicious transactions has increased thirty-five percent on average compared to 2019. Third, the system hardware which is located at the National Information Resources Service guarantees much stronger levels of security and stability in management. The application of the standard framework on e-government has ensured an efficient integration of electronic resources and has improved the systems daily processing performance by more than nine times compared to the previous system. In order to more effectively respond to the increasingly diverse and complex types of money laundering schemes, the authorities will continue to work on improvements to the AML system. * Please refer to the attached PDF for details.
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Mar 03, 2021
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Mar 02, 2021
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Mar 02, 2021
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Feb 26, 2021
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Feb 22, 2021
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Feb 22, 2021
- FSC Introduces Guidelines on MyData Services and Establishes MyData Support Center
- The FSC introduced guidelines on MyData services on February 22, which contain details about the consumers data privacy rights, scope of data transfers, operational procedures, obligations for service providers and so on, as MyData businesses will begin to offer their services using standardized API beginning on August 4, 2021. In addition, MyData support center has been set up at the Korea Credit Information Services to facilitate a seamless operation for both service providers and consumers. The center will provide support for quick resolution of conflicts and consumer complaints through MyData web portal. Guideline Details I. Scope of Data Provision The guidelines specify the types of consumer credit and financial data that can be provided through MyData services from a range of financial sectors, such as credit finance and financial investment businesses, insurance businesses, credit card companies, electronic financial services, etc. A further expansion on the types of consumer data available for MyData will be reviewed and decided in the future. II. Protection of Consumer Rights The guidelines contain measures to ensure that consumers are giving consent to data transfer with sufficient awareness of their data privacy rights through the use of easy-to-understand language and visual contents while allowing freedom of consent, denial, withdrawal, etc. To strengthen data protection, MyData businesses will be required to make their service cancellation process easy and completely remove consumer credit data from their platform when cancellation occurs. MyData firms will be prohibited from offering excessive rewards as sales pitch to prevent excessive competition in the industry. For the purpose of data security management, MyData firms will be subject a set of specific data security standards and the suitability and vulnerability tests. III. Data Transfer Process First, data subject files a data transfer request at a financial institution after choosing specific ty
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Feb 22, 2021
- FSC to Strengthen Liquidity Management of Specialized Credit Finance Companies
- The FSC announced a set of measures aimed at strengthening the liquidity management of specialized credit finance companies on February 22. The measures include (a) establishing best practice guidelines, (b) strengthening disclosure requirements and (c) gradually reducing the maximum leverage on credit finance (non-credit card) businesses. Background Specialized credit finance businesses are lenders without deposit-taking functions.They usually finance their business through borrowings or the issuance of corporate bonds and asset-backed securities (ABS). In particular, their heavy reliance on debt finance, about 73.9 percent of their financing,creates a problem of risk transfer to financial institutions holding their corporate bonds, especially if credit finance companies face solvency problems. In this regard, there have been concerns about credit finance companies turning into a conduit of systemic risk in times of an unexpected economic shock such as COVID-19. Therefore, liquidity problems of credit finance businesses can pose a risk not only to the borrowers with mid-to-low credit backgrounds but also to the real economy as they may cause a drop in consumption and corporate facility investment. Key Measures I. Best Practice Guidelines on Liquidity Management The best practice guidelines on specialized credit finance companies liquidity management will be introduced for implementation beginning in April this year. - (Target) Bond issuing credit finance companies and those with more than KRW100 billion in total assets will be subject to the new guidelines. - (Role of Board and Management) Board of directors should oversee the establishment and operation of liquidity management strategies and the company management should prepare specific management process and criteria and regularly report to its board members. - (Liquidity Risk Indicators) Major liquidity risk indicators include corporate bond maturity distribution, liquid asset ratio, short-term debt ratio, etc.
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Feb 19, 2021
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Feb 18, 2021
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Feb 18, 2021
- FSC Announces Rules Change to Improve the Recovery and Resolution Regimes of SIFIs
- The FSC announced a revision proposal for the Enforcement Decree of the Act on the Structural Improvement of the Financial Industry on February 18, which will be put up for public notice from February 19 to April 1, 2021. The revision proposal to the Enforcement Decree is a follow-up to the revised Act passed at the National Assembly in December last year which is aimed at strengthening the recovery and resolution regimes of the systemically important financial institutions (SIFIs) as recommended by the Financial Stability Board. The revisions are expected to help improve the preparedness and responsiveness of SIFIs in their crisis management. Key Revisions (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 commissioner (FS
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Feb 17, 2021
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Feb 16, 2021
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Feb 15, 2021
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Feb 15, 2021
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Feb 10, 2021
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Feb 09, 2021
- Digital Finance Meeting Discusses Ways to Improve Rules for Fintechs and Big Techs
- Vice Chairman Doh Kyu-sang held the 6th consultative body meeting on digital finance via teleconference on February 9 to discuss ways to improve rules for both fintechs and big techs and to examine areas for further improvements in the financial regulatory sandbox program. The following is a summary of Vice Chairman Dohs remarks. (Rules on Fintechs and Big Techs) Since October last year, the FSC has held talks with both fintechs and big techs on ten different occasions. Through these meetings, industry officials have suggested a total of seventy-four areas where regulatory reforms are needed. On fifty-two of them, the FSC will immediate take actions to improve the rules. On eleven others that are considered as mid- to long-term projects and require coordination with other ministries or further considerations for their impact on financial consumers, the FSC will continue to seek ways to make improvements. On the remaining eleven areas where it is deemed to be difficult to seek immediate change at the moment, the authorities will continue to closely monitor the trends to make improvements when conditions become permissible. On regulatory reforms to promote fintech innovation, the FSC will pursue the following policies. First, the FSC will work to create an environment where new digital businesses can be quickly launched and flourish. As many fintechs and platform service providers have requested, the authorities will work to provide strong support for launching new and innovative financial services through platforms. To this end, the FSC will ensure the launch of new innovative financial services through the regulatory sandbox program while working for a prompt enactment of the relevant amendments to the Electronic Financial Transactions Act. To build a strong foundation for the MyData industry, the FSC will promptly work to provide medium- and small-sized fintechs with support for their API data standardization and build a one-stop integrated MyData authentication sy
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Feb 08, 2021
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Feb 08, 2021
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Feb 05, 2021
- Rules Change Announced for Insurance Businesses Specializing in Small-sum and Short-term Policies
- The FSC announced the revisions to the Enforcement Decree of the Insurance Business Act on February 4, setting entry requirements for the establishment of insurance businesses specializing in small-sum, short-term policies and introducing measures to improve the soundness of the insurance industry. The revisions will be put up for public notice for forty days until March 17, 2021. Key Revisions (Small-sum Shor-term Insurance Policies) The minimum capital requirement for setting up an insurance business specializing in small-sum, short-term insurance policies will be set at KRW2 billion. Small-sum, short-term insurance coverages will be allowed in all insurance coverage areas where applicable with a coverage term of one year, premiums of up to KRW50 million and the insurers annual gross premium revenues up to KRW50 billion. (Requirement for External Evaluation on Policy Reserves) Insurance businesses with total assets of KRW1 trillion or more will be required to have external actuaries approve the appropriateness of their policy reserves. This requirement will also be applied to the insurers with less than KRW1 trillion in total assets but whose policy coverage types are considered as essential for them to ensure the payout capabilities. The external actuaries will be entitled to a right to request relevant information from insurance companies. To guarantee impartiality, external evaluations from the same institution will not be allowed for four consecutive years. (Rules on Subsidiaries) The revisions will clearly indicate that insurers will be permitted to own MyData and health care-related businesses as subsidiaries. Expectation The authorities expect that the revisions will help promote the development of diverse types of small-sum, short-term insurance products for consumers according to their individual lifestyle, improve the soundness and competitiveness of insurance businesses and encourage insurers to boost investment and cooperation in new business areas, su
