Regulations on Prosecutor Processing Period, Exemption from Sanctions for Minor Violations... Revision of Financial Company Sanction Regulations

[Asia Economy Reporter Kim Hyo-jin] The rights and interests of financial companies regarding inspections and sanctions by financial authorities will be strengthened.

On the 13th, the Financial Services Commission held a regular meeting at the Government Seoul Office and approved amendments to the "Regulations on Inspection and Sanctions of Financial Institutions" and its enforcement rules.

The financial authorities stipulated standard processing periods from 'inspection completion to result notification' for each type of inspection. Comprehensive inspections are 180 days, compliance inspections among sector inspections are 152 days, and evaluation inspections are 90 days. If there are no sanction matters subject to the Sanctions Review Committee, the periods are 160 days, 132 days, and 90 days respectively.

This measure was taken reflecting concerns that the time between the end of an inspection and the notification of results was too long, increasing legal and psychological uncertainty.

The current regulation requiring financial companies to be notified one week before an on-site inspection conducted by financial authorities has been amended to require notification one month in advance.

Additionally, instead of uniformly sanctioning minor violations caused by lack of legal knowledge or simple negligence, a sanction substitution measure will be introduced that exempts sanctions on the condition of completing compliance education.

The education-conditioned sanction exemption system applies to current and former executives and employees of financial companies when the sanction level corresponds to 'caution' and the degree of illegal or improper conduct is minor.

Until now, it was possible to review the sanction agenda three days before the Sanctions Review Committee meeting, but from now on, it can be reviewed five business days in advance.

In sanction hearings, usually only the sanction targets and their legal representatives could attend and make statements, but going forward, market and industry experts and other witnesses can apply to attend and make statements.

The amendment also includes the codification of the rights protection officer system, which independently listens to the opinions of financial companies and actively represents their positions during the sanction process, as well as measures to diversify the composition of private members in the Sanctions Review Committee.

The financial authorities also plan to institutionalize the right of the target to be informed of the review results after the sanction hearing ends.

Furthermore, if financial companies and their executives and employees make efforts to voluntarily correct violations, the financial authorities will reflect this in sanction mitigation, expanding incentives such as reductions in fines and penalties.

Through this, the financial authorities expect that internal control within financial companies will be activated and efforts for voluntary correction and improvement of illegal acts will be enhanced.

In addition, to make sanction mitigation for companies with excellent internal control practically possible, the financial authorities plan to specify and rationalize judgment criteria by newly establishing "quantitative standards."

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