Press Releases - Financial Services Commission

Press Releases

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Mar 24, 2021

Application Opens for Participating Businesses to the 2021 Korea Fintech Week

The FSC announced that the application for the 3rd Korea Fintech Week will be open from March 24 to April 7 for prospective businesses wishing to showcase their innovative fintech services. The 2021 Korea Fintech Week is scheduled to be held from May 26 to 28 under the theme of fintech and sustainable financial innovation. The offline to online (O2O) international fintech expo will provide diverse promotional, vocational, educational and networking programs and opportunities that will help raise awareness on fintechs and accelerate financial innovation. The event will feature five online exhibition halls and two online job fair halls. More than one hundred fintech firms will be given opportunities to present their services in five virtual exhibition hallsthe fintech start-up hall, fintech scale-up hall, fintech supporter hall, financial enterprise hall and global enterprise hall. The online job fair halls will be hosted by some forty business entities and include both financial companies and fintechs. While there are no participation fees, participating businesses need to prepare their own digital promotional materials. Application will be accepted from 9:00 am Wednesday, March 24 until 6:00 pm Wednesday, April 7. Prospective participants should download the application form from www.fintech.or.kr and submit their applications along with supporting materials via email at fintechweek@fintech.or.kr. The selection results will be announced on Friday, April 16 at www.fintech.or.kr. * Please refer to the attached PDF for details.
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Mar 18, 2021

Revised Rules on PEFs to Bolster Investor Protection and Enhance Regulatory Supervision

The FSC approved the revisions to the regulation on financial investment services on March 17 as a follow-up measure to the effort to improve the regulatory framework on private equity funds announced on April 27, 2020.The revised rules will go into effect from March 18, 2021 unless otherwise noted below. Key Revisions a) Strengthen rules on the management of cross trading and leveraged schemes, such as total return swaps (TRS) b) Strengthen oversight over inappropriate sales practices by prohibiting the management of PEFs in violation of prospectus requirements c) Bolster the minimum equity capital requirement for professional PEF management firms d) Require asset management firms to report compliance on their internal control and risk management duties and expand their reporting duties on PEFs to include risks and risk management status * Please refer to the attached PDF for details.
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Mar 17, 2021

New Legislation on Financial Consumer Protection to Take Effect from March 25

The FSC approved the supervisory regulation on financial consumer protection on March 17 as a necessary final step for the implementation of the newly enacted Financial Consumer Protection Act beginning on March 25, 2021. The implementation of the Financial Consumer Protection Act will (a) expand the application of the six major sales regulations to all financial products, (b) require financial institutions to set up internal control standards for consumer protection, (c) introduce punitive fines of up to KRW100 billion as well as tougher criminal penalties, (d) expand consumer rights for subscription withdrawal and cancellation of unfair and illegitimate contracts, and (e) strengthen measures for consumer remedies. Although the new law will go into effect from March 25, certain aspects of the measures that require more preparation, such as setting up internal control standards or system development, the application of new regulations will be deferred for six months. In the meantime, the authorities plan to hold a series of information sessions to make sure that both the consumers and financial businesses across different sectors are well informed about the specifics of the new law. The financial authorities will continue to provide support and work to ensure a smooth implementation of the new law on financial consumer protection. * Please refer to the attached PDF for details.
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Mar 16, 2021

AML Requirements of Virtual Asset Service Providers to Take Effect from March 25

The FSC announced that the revised rule that mandates AML duties on virtual asset service providers (VASPs) will go into effect on March 25, 2021, as the government approved the revised Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information at a cabinet meeting held on March 16. Key Provisions I. Scope of VASPs Virtual asset service providers are virtual asset trading service providers, virtual asset safekeeping and administration service providers and virtual asset digital wallet service providers that are engaged in the purchase and sales, exchange and transfer, safekeeping and administration, intermediation and brokerage of virtual assets and virtual asset transactions. II. Business registration of VASPs VASPs are required to register their business with the Korea Financial Intelligence Unit (KoFIU) prior to the commencement of their business operation. Existing businesses that qualify as VASPs should register within six months (until September 24, 2021) or they will be subject to penalties. III. AML duties of VASPs Beginning on March 25, 2021, the registered VASPs will be subject to the anti-money laundering (AML) requirements, such as duties to verify identities of customers, file reports on suspicious transactions, etc. The authorities will carry out inspection and supervision on VASPs with regard to their compliance of AML requirements from the time of business registration. As the requirement to check and verify the identity of customers applies only to the registered businesses, consumers are advised to check the status of business registration and practice caution against VASPs requesting information about their resident registration numbers. * Please refer to the attached PDF for details.
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Mar 15, 2021

FSC to Provide Continued Support through Corporate Asset Purchase Program

The FSC announced that the corporate asset purchase program that was launched in July last year has provided KRW1.1 trillion in support to businesses facing temporary liquidity shortages amid the COVID-19 pandemic. The support provided through purchase of companies real estate assets amounted to KRW658.1 billion while the support extended via purchase of vessels from maritime shipping companies amounted to KRW417.1 billion. The corporate asset purchase program will seek to make available about KRW1 trillion in support for business asset sell-offs in 2021. The program will carry out demand surveys to search for companies in need of asset sell-offs and prioritize providing support to SMEs and middle market enterprises. * Please refer to the attached PDF for details.
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Mar 11, 2021

New Deal Fund Makes 1st Business Investment in Smart Health Care Sector

FSC Chairman Eun Sung-soo visited Biocores biotechnology division in Yongin-si on March 11 and delivered congratulatory remarks as the company has been selected as the first recipient of investment from a New Deal fund. In his remarks, Chairman Eun talked about the importance of the first New Deal fund investment setting a best practice example for subsequent investments in both green and digital New Deal areas. Chairman Eun also spoke about the importance of boosting private sector investment in New Deal ecosystem, which will help foster the economys future growth areas. In this regard, Chairman Eun pledged that the government will provide strong support to facilitate investment in New Deal businesses and infrastructures. * Please refer to the attached PDF for details.
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Mar 11, 2021

FSC Announces Revisions to the Enforcement Decree of the FSCMA

The FSC announced a revision proposal for the Enforcement Decree of the Financial Investment Services and Capital Markets Act on March 11. The revision proposal contains measures to bring improvements to the Chinese wall regulation,ease reporting duties on consignment, set standards on financial investment businesses credit extension to overseas branches and restrict investors from placing multiple orders for IPO subscription. The revision proposal will be put up for public notice until April 20 and will go into effect on May 20, 2021. Key Revisions I. Chinese Wall Regulation The revision proposal promotes more autonomy and accountability of financial investment businesses with respect to their internal management of Chinese wall policies. It specifies the types of information subject to the Chinese wall regulation, requirements for internal control standards, etc. In this regard, material nonpublic information and information on their clients asset management status will be subject to the Chinese Wall regulation. Financial investment businesses will be required to maintain specific internal control standards with respect to the prevention of information sharing, specific methods for information barriers, exemptions, etc. An independent board-level position should oversee the management of the internal control standards and the relevant information will be subject to disclosure. II. Consignment Rules The revised Act allows in principle financial investment businesses to consign their work to third-party agents except for duties pertaining to internal control. In this regard, the revised Enforcement Decree specifies internal control duties as duties related to compliance, internal audit and inspection, risk management and credit risk analysis evaluation. Their reporting duty on consignment to the FSC will also be changed from seven days prior to the consignment to within two weeks after the consignment. III. Credit Extension to Overseas Branches Financial investment
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Mar 11, 2021

FSC Announces Revisions to the Supervisory Regulation on Insurance Business

The FSC announced revisions to the supervisory regulation on insurance business on March 11 to prepare for the implementation of the revised Insurance Business Act which is expected to take effect on June 9, 2021. The revised regulation will go into effect in the first half of this year. Key Revisions I. Disclosure Rules Regarding Litigation Information Currently, insurers are required to disclose information about the number of litigations on insurance claims and the rate of claims payments vis--vis litigations. In order to prevent insurers from misusing the litigation process against the underaged or financially vulnerable customers, the revised regulation will expand their disclosure requirements to include information about how many times they have convened litigation control committee meetings as well as their decisions. II. Insurance Coverage Period on Small-sum Short-term Insurance Policies As small-sum and short-term insurance products are still at an early stage of being introduced, their coverage period will be limited to one year to ensure consumer protection. III. External Evaluation on Policy Reserves Under the revised Enforcement Decree, insurance firms are required to have external actuaries approve the appropriateness of their policy reserves.In this regard, the result of external evaluation should be submitted to the Financial Supervisory Service, which may in turn request a re-evaluation. IV. Foreign Exchange Position Limit Currently, the foreign exchange position limit of insurance companies is set at twenty percent of the total adjusted capital. The revised regulation will increase this to thirty percent of the total adjusted capital as the foreign exchange position limit of insurance companies has remained low compared to other financial sectors, such as banks and financial investment businesses. * Please refer to the attached PDF for details.
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Mar 10, 2021

FSC Introduces New Penalty Standards on Virtual Asset Service Providers

The FSC announced a revision proposal for the supervisory regulation on virtual asset service providers on March 10 as the revised Act on Reporting and Using Specified Financial Transaction Information is scheduled to go into effect on March 25, 2021. The revision proposal introduces new penalty standards on VASPs, simplifies and integrates existing penalty rules and improves rules on penalty abatement to provide relief for small-scale financial enterprises. Under the revised regulation, financial institutions and VASPs will be subject to penalties if they are found to be in violation of internal control duties (e.g. failure to report suspicious transaction activities), data maintenance duties (e.g. failure to keep relevant data on suspicious transactions) and duties specifically pertaining to VASPs (e.g. failure to keep separate management of customers transactions records). The revised regulation also introduces a new penalty abatement of fifty percent. For small-scale entities, penalty abatement can be granted in excess of the fifty percent limit. The revision proposal will be put up for public notice from March 11 until April 20 and will take effect immediately after pronouncement. * Please refer to the attached PDF for details.
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Mar 10, 2021

Household Loans, February 2021

The outstanding balance of household loansin all financial sectors rose KRW9.5 trillion from the previous month at the end of February 2021 (up 8.5% y-o-y). In the banking sector, household loans increased KRW6.7 trillion while the non-banking sector saw an increase of KRW2.8 trillion. All financial sectors (y-o-y): +5.3% (Feb 2019) +5.0% (Feb 2020) +8.5% (Feb 2021) By type, mortgage loans rose KRW7.7 trillion in February, growing KRW1.8 trillion from the previous month (up KRW0.8 trillion y-o-y). In the banking sector, jeonseloans and mortgage loans grew KRW3.4 trillion and KRW2.3 trillion, respectively, while mortgage lending by non-banks increased KRW1.3 trillion from the previous month. Other types of loans rose KRW1.8 trillion, down KRW2.7 trillion from the previous month as demand for credit loans declined. The financial authorities will closely monitor trends in household loans and introduce a more effective household debt management plan focusing on individual DSR within this month. * Please refer to the attached PDF for details.
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Mar 09, 2021

FSC Decides to Extend the Availability of Eased LCR and LTD Rules for Banks

The FSC decided to extend the availability of some of the interim deregulatory measures introduced on April 17 of last year to ensure continued support for the financial sector on March 8. The FSC plans to work on a gradual rollback and step-by-step normalization of regulations while maintaining close monitoring and supervision on the soundness of financial institutions. * Please refer to the attached PDF for details.
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Mar 09, 2021

Government Approves Revision Bill to Strengthen Investor Protection with PEFs

The government approved a revision bill to the Enforcement Decree of the Financial Investment Services and Capital Markets Act during a cabinet meeting held on March 9 with an aim to strengthen investor protection in the private equity fund (PEF) market. The revision bill is a follow-up to the measures to improve the regulatory framework on private equity funds announced on April 27, 2020and is scheduled go into effect immediately after promulgation in mid-March. Key Provisions I. Close Loopholes to Prevent Evasion of Tougher Regulations Currently, the number of investors for a private equity fund is limited to up to forty-nine.When a feeder fund invests in a master fund and the amount of that investment makes up ten percent or more of the master fund, the number of investors from feeder fund is counted toward the number of investors of the master fund. Under the current scheme, when a number of feeder funds makes investments of less than ten percent each toward a master fund, the master fund can be operated as a PEFand not as a publicly traded fundeven when the actual number of investors exceeds the regulated threshold of less than fifty. To address this problem, the revised bill adds another provision to the current scheme, which requires that when a number of feeder funds from a single PEF management firm invests in a master fund and their total investment amount makes up thirty percent or more of the master fund, the number of investors in the feeder funds will be counted toward the total number of investors of the master fund. II. Strengthen Regulations on Unfair and Inappropriate Sales Activities Cross investing or circular investing between PEFs managed by the same entity exposes the problem of artificially inflating the volume of trust or the possibility of dual compensations. In addition, recent PEF mis-selling cases revealed coercive sales tactics in return for other monetary benefits, such as business investment or loan from the fund. The revision bill pr
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Mar 09, 2021

Financial Authorities to Provide Continued Support and Prepare for Post-pandemic Economy

Vice Chairman Doh Kyu-sang held the 36th financial risk assessment meeting via teleconference on March 9 and discussed the implementation of the COVID-19 financial support programs. The following is a summary of Vice Chairman Dohs remarks. (Financial Market Monitoring) With COVID-19 vaccines and a large-scale stimulus plan in the US, positive outlooks for economic recovery are spreading. However, expected inflation and interest rate hikes in overseas markets require close market monitoring as they may place cost burdens on domestic companies and households financing needs. As such, the authorities will closely monitor risks and prepare appropriate response when necessary. (COVID-19 Financial Support) Last week, financial institutions agreed to extend the availability of maturity extension and payment deferral programs for small merchants and SMEs until the end of September 2021. State-backed financial institutions also plan to offer an extension of loans and guarantees for middle market enterprises until September this year. The low interest rate lending support for small merchants will also be available for one more year. In order to help businesses prepare for a post-pandemic era, the government will extend the application period of the key industry stabilization fund, which is currently set to expire at the end of April this year, and find ways to make use of the fund to help businesses prepare for a post-pandemic era. In addition, the government will continue to provide support through the corporate asset purchase program.This year, on-site consulting services will also be made available to help businesses with their financing needs. (Mortgage Loans) The government has introduced diverse measures to manage household debt and stabilize the housing market. Current homeowners purchasing another house with mortgage loans in regulated areas are required to move into new home and sell their current properties within a specified time frame. In this regard, the financia
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Mar 08, 2021

FSC Announces New Rules on the Supervision of Non-holding Financial Groups

The FSC announced its proposal of the Enforcement Decree to the new legislation on the supervision of non-holding financial groups on March 8. The proposal will be put up for public notice from March 9 until April 19, 2021 and will go into effect on June 30, the same day the new Act becomes effective. Key Provisions A. Non-holding Financial Group: Non-holding financial groups are those with total assets of KRW5 trillion or more with two or more number of subsidiaries operating financial businesses.To guarantee a steady application of the law, a temporary decline in total assets below the KRW5 trillion threshold will not remove them from being designated as non-holding financial groups for a three-year period. B. Internal Control Risk Management: Non-holding financial groups will be required to establish specific standards on internal control and risk management while conducting internal evaluation on a regular basis to ensure that measures for risk management, internal control and capital adequacy are properly maintained. C. Capital Adequacy Assessment: Non-holding financial groups should maintain their capital adequacy ratios at appropriate levels and carry out self-assessment on their group-wide risks. D. Intra-group transaction and Reporting Disclosure: Intra-group transactions in the amount of KRW5 billionor more should be first approved by the board of the relevant financial subsidiary. Non-holding financial groups will be required to file reports and disclose information on their ownership and governance structure, internal control risk management, capital adequacy and intra-group transaction risk concentration. E. Business Improvement Plan: Non-holding financial groups that are deemed to have problems with financial soundness will be required to draw up and submit business improvement plans aimed at enhancing their financial soundness. The FSC may request additional actions, including a revision or supplementary measure, and take appropriate actions in accord
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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

FSC Holds Meeting on Developing Corporate Finance Platform to Support Innovative Businesses

Vice Chairman Doh Kyu-sang held a meeting on corporate finance via teleconference on March 3 and discussed ways to develop a corporate finance platform to more effectively provide financing support to innovative businesses. The meeting also discussed recent trends in corporate finance in both traditional and newly emerging industries and policy issues surrounding corporate finance in a post-COVID-19 era. The following is a summary of Vice Chairman Dohs opening remarks. (Policy on Corporate Finance) The COVID-19 pandemic has caused abrupt changes in global industrial structures. The acceleration of transition toward more digital and contactless economic activities, transformation of manufacturing into services and that of services into platforms have led to increased competition across industries. A green transition toward an eco-friendly and low-carbon economy is also taking place rapidly. These changes in the economic and industrial structures are more likely to place burdens on SMEs and middle market enterprises than they are to large companies. In this regard, there are also concerns about grim consequences in a post-pandemic era of failing to act preemptively now. Therefore, it is necessary to ensure that there are policies in place to help SMEs and middle market enterprises to more effectively respond to the structural changes taking place across industries. (Corporate Finance Platform) These changes also require a fundamental shift in ways corporate finance is handled in the financial industry. The current industrial classification used in the financial industry does not fully take into account rapid changes taking place in industries, technologies, etc. There are also limits and restrictions in the current system in terms of providing sufficient funds for businesses to support their attempts at transforming a business or exploring a new business area as financial institutions may lack sufficient understanding about the most recent industry trends or technolog
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Mar 02, 2021

Maturity Extension and Payment Deferral for SMEs and Small Merchants Extended until September

The FSC announced on March 2 the availability of the current loan maturity extension and deferment of principal and interest payment programs for SMEs and small merchants until the end of September this year. The decision for a six-month extension of the lending support for SMEs and small merchants comes amid the continuing social distancing measures and pandemic-inflicted hardship imposed on businesses. As such, qualified business entities may apply or reapply for lending support according to the same standards that were announced back in March 2020. Along with the six-month extension of the lending support, the FSC also announced measures to help ease payment burdens once the deferral period expires from October 1. For those who sign up for a consulting service, financial institutions will provide consulting on the most appropriate way to make long-term, installment payments possible based on different financial situations in which borrowers find themselves. At the same time, financial institutions will be required to closely monitor any changes in borrowers payment capabilities and provide assistance immediately when deemed necessary. * Please refer to the attached PDF for details.
Mar 02, 2021

Plans to Boost Consumer Confidence and Promote Innovation in the Insurance Industry

The FSC announced a policy framework on insurance businesses on March 2, which aims to improve consumer confidence and promote innovation in the insurance industry. It details twelve key initiatives in four specific areas(a) working on improvements to the industry-wide structure of insurance business and boosting consumer confidence (b) enhancing the role of insurance as a social safety net, (c) promoting digital innovation and (d) making improvements to business management practices. This policy framework has been prepared based on expert opinions gathered from numerous committee and taskforce meetings, competitive assessments, suggestions from thinktanks and communication with market participants. As this framework sets forth a mid- to long-term direction of the insurance industry, specific implementation plans will be determined later. Key Measures I. Improving Industry-wide Structure and Boosting Consumer Confidence (a) Facilitating new players to enter the insurance market to promote competition and innovation - Allow market entrance of new types of insurance businesses specializing in small-sum and short-term insurance policies and those providing insurance services through online and digital channels - Introduce a more flexible licensing scheme for insurance businesses through which insurance companies are permitted to hold multiple subsidiaries specializing in same insurance categories (b) Revising rules to expand the availability of digital sales channels - Promote the use of digital, AI-based and contactless insurance sales channels - Expand innovative services by establishing standards on online platform services (c) Bolstering consumer protection throughout the subscription process - Tighten requirements on the sales process for risky products - Strengthen accountability of general agents (GAs) - Digitalize the damage claiming process and improve procedures on claim adjustment, medical advice, etc. II. Enhancing the Role of Insurance as a Social Safety N
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Feb 26, 2021

FSC Announces Korea's Risk-free Reference Rate

Vice Chairman Doh Kyu-sang held the 35th financial risk assessment meeting and 3rd taskforce meeting on benchmark interest rate reform via teleconference on February 26. At the meeting, Vice Chairman Doh announced the authorities selection of the overnight repo rate of government bonds and monetary stabilization bonds as Koreas new risk-free reference rate (RFR). The following is a summary of Vice Chairman Dohs remarks. (Transition from LIBOR) The uncertainty surrounding the continuing availability of LIBOR beyond the end of 2021 requires financial institutions and businesses to be thoroughly prepared. In this regard, financial institutions and businesses are recommended to refrain from making new contracts based on LIBOR after the end of this year to minimize risks. For the current LIBOR-based contracts with maturities extending beyond the end of this year, fallback provisions should be added prior to the third quarter of this year. The financial authorities along with the relevant institutions have been operating a taskforce to prepare for the discontinuation of LIBOR under the auspices of the working group on reforming benchmark interest rate. The authorities will work for a seamless and systematic transition from LIBOR, ensure that financial institutions have adequate consumer protection measures in place and regularly monitor the financial institutions LIBOR exposures, response plans, etc. (Selection of RFR) The working group on benchmark interest rate reform has completed the selection of a RFR after a year and eight months of the selection process. After a series of discussions and votes by a market participants group,the working group has selected the overnight repo rate of government bonds and monetary stabilization bonds as the RFR. The repo markets abundant liquidity and its expandable use in derivatives markets were the main reasons for selection. After additional discussions on the calculation method of RFR, the Korea Securities Depository which current
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Feb 22, 2021

FSC Chairman Discusses Six-month Extension of Loan Deferment with Heads of Financial Associations

FSC Chairman Eun Sung-soo met with the heads of the five major financial associations and federations on February 22 and held talks on the necessity of a six-month extension of the loan deferment program and ways to facilitate a soft landing of the termination of the temporary support measures. While agreeing on the need to extend the availability of the loan deferment program for six more months, the participants also vowed to come up with ways to help facilitate a soft landing when the suspension of principal and interest payments expires. In order to minimize burdens placed on the financial sector, the participants also shared the same view on the need to extend some of the temporary deregulatory measures granted to financial companies beyond their expirations. In this regard, Chairman Eun stated that the FSC plans to gradually roll back the temporary deregulatory and financial response measures based on a judgement of both quantitative and qualitative indicators in the following areas(a) COVID-19 prevention and containment, (b) real economy and (c) financial stability. Chairman Eun stressed that the policy rollback will take place both gradually and flexibly. During the meeting, Chaiman Eun also discussed this years financial policy agenda, including the governments plan for New Deal funds and investing in digital innovation to prepare for a post-COVID-19 economy. * Please refer to the attached PDF for details.
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