If Involved in Lawsuits or Investigations Due to Suspected Crime, P2P Business Registration Not Allowed

[Asia Economy Reporter Kim Hyo-jin] If suspected of criminal activity and involved in lawsuits, one will be unable to register for online investment-linked finance (P2P) business.

On the 30th, the Financial Services Commission and the Financial Supervisory Service announced that they have prepared a draft for the establishment of P2P business supervision regulations and enforcement rules containing these provisions.

The financial authorities made it so that P2P business registration is only possible if the business has soundness and reliability at the level of existing financial industries. Accordingly, if a lawsuit is ongoing or investigations/prosecutions are underway due to suspicions of crimes such as fraud, the P2P business registration review may be put on hold.

The financial authorities also decided to evaluate the soundness of linked loan claims that are in delinquent status at the time of registration application and require submission of management plans.

Furthermore, to minimize unregistered and unsound business practices of existing P2P companies operating after the enforcement of the P2P Act, the 'P2P Loan Guidelines' will be revised to be as consistent as possible with the law, and compliance with the guidelines will be considered during the P2P business registration review process.

To minimize investor damage caused by P2P companies handling loans with high delinquency and default risks, measures are included to restrict certain business methods or impose disclosure and management obligations if delinquency rates increase.

Handling of structured products whose individual linked loan risks are difficult for investors to assess, linked loans/investment products secured by high-risk assets such as virtual currencies and derivatives, and linked loans to borrowers (loan sharks) with high delinquency and default potential will be restricted.

The financial authorities also differentiated the size of the loss compensation reserve according to the scale of linked loans and required maintaining it even in cases of registration cancellation or business closure. P2P companies must also report their business status, financial status, governance, and transactions with related parties quarterly to supervisory agencies. The status of linked loans and linked investments must be reported monthly.

This content was produced with the assistance of AI translation services.