Total Amount Involved in Financial Crimes for 2002 Reaches 243.5 Billion Won

After a series of finance-related crimes due to moral hazard, the Financial Supervisory Commission (FSC) is about to take a comprehensive measure.

The financial watchdog decided on Jan. 29 to take strong measures including one that encourages banks to sign for an anti-financial crime memorandum, as finance-related crimes sharply increased to 223 cases, 243.5 billion won last year, from 149 cases, 43.7 billion won in 1999.

A FSC senior official announced that financial institutions including banks, insurance companies, and securities firms will have to strike a memorandum of understanding (MOU) with the FSC to suggest a detailed target with regard to financial crimes before a close investigation on whether they abide by the MOU or not.

“Financial companies of which occurrence frequency is higher than the average of the industry will have to submit the MOU with detailed plans such as operation of internal control system,” he added.

The FSC is set to evaluate the management on whether the firms live up to the MOU and sternly punish the financial companies of the same kind of incidents, possibly asking the executives to leave.

Another official of the FSC said, “The repetitive occurrences of the same incidents suggest that the internal control system doesn`t work properly. In such cases, we will call the CEOs and auditors to account by asking them to decline. Also, if auditors neglect their duty, we will not allow them to keep the position.”

In addition, the financial watchdog will push for a plan to strengthen the regulation prohibiting disciplined executives from being employed in the same industry for 3 years.

Along with this, it will investigate the accounts of executives of the financial firms as well as the families, and the guarantors, asking them to make up for the loss.

The FSC will force the financial companies to decentralize their computer systems such as back-up systems not to be in the same building, in preparation for the surging e-banking crimes.

Kwu-Jin Lim Dong-Won Kim mhjh22@donga.com daviskim@donga.com