Press Releases - Financial Services Commission

Press Releases

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Jul 22, 2021

KoFIU Notifies Foreign VASPs of Their Obligation to Register

With the Act on Reporting and Using Specified Financial Transaction Information (hereinafter the Act) going into effect from March 25, 2021, all VASPs are required to register their business with the KoFIU by September 24, 2021. As such, the KoFIU has sent out a notice to 27 foreign VASPs about their obligation to register. Obligations of Foreign VASPs The Act requires VASPs to register with the KoFIU as the law equally applies to foreign VASPs that conduct activities outside Korea but have domestic consequences within Korea. Thus, if any VASPs conduct business operation targeting Koreans, they are required to register with the KoFIU and comply with requirements under the Act regarding their business operations targeting Koreans. Notice to Foreign VASPs The KoFIU has sent out a notice signed by the Commissioner of the KoFIU to 27 foreign VASPs that have business operations targeting Koreansabout their requirement under the Act to register with the KoFIU by September 24, 2021. If foreign VASPs fail to register with the KoFIU, they shall cease their business operation targeting Koreans from September 25, 2021. They are notified of the possibility of being subject to penalties as prescribed by the Act if they continue to operate without registration. Foreign VASPs that have not received any notice from the KoFIU but have business operation targeting Koreans are also required to register with the KoFIU or suspend their business operation targeting Koreans from September 25, 2021. If they continue to operate business without registration, they will be subject to up to five years of imprisonment or a maximum fine of KRW50 million as prescribed by the Act. Future Plan For foreign VASPs that continue to operate without registration beyond the September 24 deadline, the KoFIU will notify them of their illegal activities and take actions such as blocking access to their websites to inhibit their illegal business operations. The KoFIU will also bring charges against unregister
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Jul 15, 2021

Vice Chairman Holds 1st Taskforce Meeting on Household Debt Management

The FSC held the 1st taskforce meeting on household debt management chaired by Vice Chairman Doh Kyu-sang on July 15 and discussed household debt management measures for the second half of this year. The following is a summary of Vice Chairman Dohs remarks. (Key Policy Direction) For the past year and a half, the Korean economy has faced an unprecedented level of crisis triggered by the COVID-19 pandemic. In response, the financial authorities introduced support measures worth KRW175 trillion-plus. As a result, the recovery has been faster than expected. However, in the process, the level of debt in the private sector has soared with a rapid rise in household debt posing risks to the economy. In the meantime, continuing with the provision of sufficient financing support remains an important task, especially with the recent spread of COVID19 variants. The financial authorities are aiming for an appropriate balance between these two objectives while aiming to control household debt growth within 5 to 6 percent this year and about 4 percent in next year. (Household Debt in H1 2021) Household debt in the first half of this year rose KRW63.3 trillion, or about KRW10.6 trillion a month. Compared to the same period from the previous year (up KRW6.1 trillion), the pace of growth has accelerated, but it has slowed down compared to the second half of last year (up KRW12.6 trillion). The household debt growth remained at about the same level in the banking sector but expanded in the non-banking sector. Given a higher rate of housing market transactions, there are growing risks in the non-banking sector. (Household Debt Management Plan for H2 2021) In order to meet the goal of containing the growth of household debt within the 5 to 6 percent level, the financial authorities will work to ensure effective implementation of the household debt management measures, such as a gradual expansion of the application of DSR on individual borrowers. In the fourth quarter, the authorities w
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Jul 14, 2021

Household Loans, June 2021

The outstanding balance of household loans in all financial sectors rose KRW10.1 trillion from the previous month at the end of June 2021 (up 9.6% y-o-y). The household loan balance increased KRW6.3 trillion in the banking sector and KRW3.8 trillion in the non-banking sector. All financial sectors (y-o-y): +10.0% (Apr 2021) +9.6% (May 2021) +9.6% (Jun 2021) By type, mortgage loans expanded KRW6.3 trillion in June, growing at a faster rate compared with the previous month (up KRW4.5 trillion y-o-y) due to active housing market transactions. Other types of loans including credit loans increased KRW3.7 trillion, remaining at a similar level to the average monthly growth rate (up KRW4.5 trillion) in the first half of this year. The financial authorities will closely monitor trends in household loans while working to ensure an effective implementation of the household debt management measures. * Please refer to the attached PDF for details.
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Jul 14, 2021

FSC Proposes 1-Year Postponement of External Audit on Consolidated Internal Accounting Control

The FSC proposed a postponement of external audit on the consolidated internal accounting control system for one year as many firms are experiencing difficulty in setting up the internal accounting management system due to COVID-19. The FSC introduced its proposal through revisions to the Enforcement Decree of the Act on External Audit of Stock Companies, which will be put up for public notice from July 14 to August 23. Under the current regulatory regime, stock companies with KRW2 trillion or more in assets would be required to set up and operate an internal accounting control system under a consolidated basis and be subject to an external audit from 2022. However, for many companies that have foreign affiliates and are unable to travel overseas due to COVID-19, it has been difficult to set up a consolidated internal accounting control system. As such, the revised Enforcement Decree proposes that the external audit on consolidated internal accounting control system be postponed for one year, while early implementation also remains an option for companies that wish to follow the previously set schedule. Aside from the postponement, the revision proposal also introduced measures to control external audit quality and to sanction registered auditors if they are found to have violated the duty to maintain certain registration requirements. The authorities plan to finish the revision process by the end of 2021. * Please refer to the attached PDF for details.
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Jul 13, 2021

FSC Grants Preliminary Approvals for Credit Information Business

The FSC granted preliminary approvals to Shinhan Card and Korea Technology Credit Bureau for their application to assume credit information business on July 13. The FSC decided that both companies satisfied all the requirements set forth by the Credit Information Act, such as the large shareholder qualification, etc. Shinhan Cards application was for individual business CB while that of Korea Technology Credit Bureau was for tech credit bureau (TCB). The granting of preliminary approvals for credit information business today is the first such decision made by the FSC since the revised Credit Information Act went into effect in August 2020.With the revised Act, it is expected that providing more accurate and diverse models for credit evaluation will become possible for both individual business owners and technology firms. This will also have a positive impact on the development of financial products suitable to the risk characteristics of different borrower types. * Please refer to the attached PDF for details.
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Jul 13, 2021

FSC Announces Designation of Six Non-holding Financial Groups for 2021

The FSC held the 13th regular meeting on July 13 and designated six non-holding financial groups for 2021 pursuant to the new law on the supervision of financial conglomerates.The designated entities are Samsung, Hanwha, Mirae Asset, Kyobo, Hyundai Motor and DB groups. The designated non-holding financial groups are required to select a top representative company within their group and report the selection to the Financial Supervisory Service within one month from the date of designation. Starting from January 14, 2021, or from six months after the designation, the designated non-holding financial groups should conduct self-inspection and assessment on group-wide risks (capital adequacy ratio, etc.) on a regular basis while maintaining internal control and risk management measures, which should be disclosed to the public in a transparent way and reported to the financial authority. The authorities expect that the designation of six non-holding financial groups will encourage sound management practices from the designated entities and have a positive impact on market confidence. * Please refer to the attached PDF for details.
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Jul 13, 2021

FSC Identifies D-SIBs for 2022

The FSC identified five bank holding companies (BHCs) and five banks as domestic systemically important banks (D-SIBs) for 2022 on July 13: Shinhan Financial Group, KB Financial Group, Hana Financial Group, Woori Financial Group, NH Financial Group, Shinhan Bank, KB Kookmin Bank, Woori Bank, KEB Hana Bank and NH Bank. Those identified as D-SIBs are required to set aside an additional common equity capital of 1%, and the higher loss absorbency requirement will take effect on January 1, 2022. The FSC will identify D-SIBs every year in accordance with assessment criteria recommended by the Basel Committee on Banking Supervision (BCBS). In addition, the FSC identified D-SIBs as domestic systemically important financial institutions (D-SIFIs) under the amended Act on the Structural Improvement of the Financial Industry. D-SIFIs are required to prepare and submit their own recovery plans to the Financial Supervisory Service (FSS) within three months from the day of being designated as a D-SIFI. * Please refer to the attached PDF for details.
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Jul 13, 2021

Authorities to Promote Mutual Cooperation between Insurance and Health Care Industries

The FSC held the 2nd taskforce meeting on promoting the role of insurers in providing health care-related services on July 13. At the meeting, officials discussed the progress of regulatory reforms as well as areas for further improvements, insurance companies access to public health care data managed by the Health Insurance Review Assessment Service (HIRA) and boosting cooperation between the insurance and health care industries. With regulatory reforms undertaken by the authorities thus far, insurance companies are now allowed to provide health care-related services to general customers, establish a health care or MyData business as a subsidiary and make use of the public health care-related big data managed by HIRA. Continuing with regulatory improvements, the authorities will introduce additional reform measures to allow insurance companies or their subsidiaries to provide platform-based digital health care-related services and to reduce cost and time for business registration. On July 8, 2021, six insurance companies gained approvals for making use of the public health care big data managed by HIRA. In the utilization process, the authorities will ensure that the public data is being used for enhancing convenience and lowering costs for health care users. A consultative body on big data will be set up to manage the safe usage of public health care-related data. The authorities will continue to work on regulatory reforms to promote the role of insurance business in health care-related services while encouraging mutual cooperation between the insurance and health care industries. * Please refer to the attached PDF for details.
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Jul 08, 2021

FSC Introduces Guideline on the Use of Artificial Intelligence in Financial Services

The FSC held a consultative body meeting on digital finance via teleconference on July 8, chaired by Vice Chairman Doh Kyu-sang, and introduced a guideline on the use of artificial intelligence in financial services to bolster public trust in AI-based financial services and continue to promote innovation in financial industry. All financial and finance-related institutions offering financial transactions and other customer oriented services using AI technologies should follow the guideline which sets forth the least necessary level of standards for AI. Key details of the guideline are as follows. a) (Responsibility) Establishment of three internal control mechanisms, such as adopting ethical principles for AI, designating an internal organization overseeing the entire process of AI-related services and maintaining a risk monitoring and management system for potential risks of privacy breach b) (Accuracy and Safety) Management of the origin and quality of data used for machine learning and establishing a privacy protection system to prevent abuse or misuse of personal financial data c) (Transparency and Fairness) Maintaining a bias control mechanism to prevent discriminatory services against certain consumer groups and pursuing fairness in service provision by establishing and evaluating impartiality standards d) (Consumer Rights) Adequate provision of explanations to financial consumers on AI-based financial services to help consumers better understand and practice their rights e) Equivalent level of safety and security measures applied to AI-based financial services developed and operated by third-party contractors. The authorities plan to begin applying the guideline within this year after a sufficient time for preparatory work. Based on this guideline, financial industry groups will draw up more detailed guidelines tailored to the needs of specific sectors. In the third quarter, the authorities also plan to announce plans for a data library and an AI testbed to c
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Jul 06, 2021

FSC Holds Symposium on COVID-19 Financial Policy

The FSC and the Korea Institute of Finance co-hosted a policy symposium on the effectiveness of COVID-19 financial policy on July 6. FSC Chairman Eun Sung-soo attended the symposium and delivered a keynote address highlighting the progress of policy implementation and future policy direction. The following is a summary of Chairman Euns remarks. (COVID-19 Crisis Policy Response) In the wake of the COVID-19 pandemic, the government rolled out policies focusing on the prevention of risk transfer channels, provision of an exhaustive level of support and setting up firewalls in financial markets to help remove market anxieties. The authorities worked on stock market and bond market stabilization measures while prioritizing support for small-scale businesses. Financial support was extended to businesses of all sizes that have been hit by the pandemic. The KRW175 trillion-plus COVID-19 financial support programs were introduced to contain fear and anxiety in markets. This unprecedented level of financial support by the government helped to quickly stabilize the financial system, provide liquidity to small merchants and SMEs while preventing large-scale bankruptcies or job losses in key industries. As a result, the Korean economy saw the smallest negative growth last year while stock markets continue to set new record highs. In March this year, the IMF stated that Koreas decisive policy response has helped the country navigate the COVID-19 shock. (Future Policy Direction) In order to overcome the pandemic-induced crisis and be prepared for potential aftershocks, an orderly process for policy normalization is necessary. First, the government will maintain close monitoring on the status of virus prevention, real economy and financial market conditions as there still exist uncertainties, such as the spread of COVID variants. Second, the government will work to ensure financial stability by preemptively managing potential risk factors, such as an excessive accumulation of debt.
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Jul 06, 2021

Maximum Legal Lending Rate Lowered to 20%

The FSC announced that a four percentage point reduction in the maximum legal lending rate from 24 percent to 20 percent will go into effect on July 7. Charging an interest rate in excess of the maximum 20 percent is illegal for new and renewal loan contracts from July 7, 2021. Financial institutions and lenders that violate this rule can face penalties of up to three years of imprisonment or maximum KRW30 million in fines. For borrowers who face difficulties in renewing their existing loan contracts or applying for new loans, various microloan opportunities are available through the Korea Inclusive Finance Agency (KINFA), including a new microloan service provided by banks that allows borrowers with low income and low credit scores who have been on other types of microloan services to make a switch to the new service. The government will operate an enhanced monitoring period between July and October to root out illegal predatory lending practices. The government also provides support for legal representation for those that are seeking to reclaim interest payments in excess of the maximum lending rate. Tailored consulting support and referral service is also available from KINFA. * Please refer to the attached PDF for details.
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Jul 02, 2021

Government to Closely Manage Risk of Rate Hike and Maintain Support for Small Businesses

Vice Chairman Doh Kyu-sang presided over the 40th financial risk assessment meeting via teleconference on July 2 and discussed the effects of looming interest rate rises on financial markets and post-pandemic transition policies. The following is a summary of Vice Chairman Dohs remarks. (Risk from Interest Rate Hike) There are growing expectations for both domestic and global economy to recover from the pandemic following a strong economic rebound seen in the U.S. However, the prospect for rate hikes poses a new challenge to economies. The Fed in June indicated that it has begun discussions on tapering and the Bank of Korea has continued to suggest the possibility of rate hikes within this year. For market participants that have largely become accustomed to the low interest rate environment, it is time to manage risks associated with possible increases in interest rates. Rate hikes are expected to have considerable effects on asset markets that have surged to record high levels on the back of abundant liquidities around the world. Unlike stock markets backed by strong fundamentals, the virtual asset and real estate markets are forecast to experience significant impact from monetary tightening. The virtual asset market is showing extremely unstable trends and housing prices surged to record levels by historical standards. Last week, the Bank of Korea identified recent asset price hikes as the main factor behind the financial vulnerability index reaching a record high level since the 2008 global financial crisis. In particular, the housing price increase in Korea in relation to income growth was found to be two to three times above the levels seen in major economies. As such, it is necessary to stay alert as experts warn about the risks of shifting monetary policy. To help mitigate risks originating from excessive debt, the government will work on effective implementation of policies, such as the application of DSR on individual borrowers. In this regard, financial in
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Jul 01, 2021

FSC Chairman Speaks on the Significance of New Microloan Service Provided by Banks

FSC Chairman Eun Sung-soo attended the MOU signing ceremony between the Korea Inclusive Finance Agency, Korea Federation of Banks and thirteen banks on July 1 for the launching of a new microloan service offered through banks. As banks will begin to make contributions to the pool of microfinance funds starting from October 9 this year pursuant to the revised Microfinance Support Act,the Korea Inclusive Finance Agency and thirteen participating banks signed an MOU establishing a cooperative working relationship between them with regard to the launching of a new microloan service available through participating banks. The new microloan service provided by banks is aimed at providing microfinance opportunities of up to KRW20 million to individuals with low income and low credit scoreswho have been using other types of microloan services for more than a year and have demonstrated improvements in terms of the level of debt or credit score. It will be available at the Industrial Bank of Korea, NH Bank, Jeonbuk Bank and BNK Kyongnam Bank from July 26 with other banks scheduled to launch within this year. At the MOU signing ceremony, FSC Chairman Eun Sung-soo spoke about the significance of the new microloan service becoming available in the banking sector and stressed the need to effectively manage household debt. (Microloan Service Provided by Banks) The government has been working to reduce burdens and improve access to financing opportunities for lower income households. As part of this effort, the newly launched microloan product will provide individuals with low income and low credit scores an opportunity to access banks for microloan services. With its launch at the end of July, the new microloan product offered through banks has a target of providing a total of about KRW300 billion by the end of this year. As such, banks and the Korea Inclusive Financial Agency should work to ensure effective implementation. (Household Debt Management) The growth in household debt a
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Jun 30, 2021

KoFIU Holds Meeting to Monitor Fraudulent Account Activities of VASPs

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

Indemnity Health Insurance 4.0 to be Available from July 1

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

FSC to Promote IP Financing for Young Startup Entrepreneurs

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

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

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

Suspension of Business Operation Extended for Optimus Asset Management

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

FSC Grants Final Approval for Additional MyData Business Entity

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

2021 Korea Fintech Week Brings About Tangible Outcome for Fintech Advancement

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