"The Amendment to the Jeongeumbeop Is Not a Big Brother Law"… Financial Services Commission Emphasizes Transparency in Digital Financial Transactions

"The Amendment to the Jeongeum Act Being Called the Big Brother (Social Surveillance and Control Power) Act Is an Excessive Misunderstanding"

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] The conflict between the Bank of Korea and the Financial Services Commission over the amendment to the Electronic Financial Transactions Act (EFTA) is intensifying. The Bank of Korea points out that the EFTA amendment could spark a 'Big Brother (social surveillance and control power)' controversy, while the Financial Services Commission argues that calling the amendment the Big Brother Act is an excessive misunderstanding.

The EFTA amendment, proposed by Yoon Kwan-seok, a member of the Democratic Party of Korea, includes the establishment of an 'electronic payment transaction clearing business' to ensure transparency in fund transactions by big tech companies. Big tech companies such as Naver and Kakao must mandatorily provide all electronic payment transaction information of users to an external clearing institution, the Korea Financial Telecommunications and Clearings Institute (KFTC). The Financial Services Commission, which gains supervisory and oversight authority over KFTC, can access the information collected by KFTC. From the Bank of Korea's perspective, which holds the exclusive authority over the 'operation and management of the payment and settlement system,' the EFTA amendment means that the Financial Services Commission infringes on the Bank of Korea's exclusive duties.

While the Bank of Korea clearly criticizes the EFTA amendment as the Big Brother Act, the Financial Services Commission insists that mandating external clearing of big tech's internal transactions is inevitable to ensure transparency in digital financial transactions. On the 19th, Eun Sung-soo, Chairman of the Financial Services Commission, said about the EFTA amendment, "The Bank of Korea's criticism of the amendment as 'Big Brother' is an exaggeration," adding, "It is like leaving phone call records with telecom companies to return money to the rightful owner when a financial accident occurs. Viewing the data requires a court warrant, so calling this Big Brother is excessive."

Experts argue for the necessity of electronic payment transaction clearing from the perspective of user protection. At a discussion hosted by the Korea Institute of Finance on the 'Issues and Directions of the EFTA Amendment,' lawyer Jung Sung-gu of Kim & Chang Law Firm emphasized the introduction of mandatory external clearing, explaining, "It functions as a measure to prevent misuse of user deposits through transparency of internal transactions and as a premise for returning user deposits in preparation for the insolvency of electronic financial service providers." He added, "KFTC already processes personal information related to the operation of the financial clearing network, and the law includes special provisions to prevent misuse of clearing institution information and to strengthen security," dismissing concerns.

Jang Sung-won, Secretary General of the Fintech Industry Association, stated, "Although external clearing may be burdensome for big tech, mandatory external clearing is necessary from the perspective of user protection." Lee Soon-ho, a research fellow at the Korea Institute of Finance, also explained, "It strengthens user protection functions by involving a credible external clearing institution in the user deposits that big tech internally manages."

As the Bank of Korea and the Financial Services Commission fail to narrow their differences, a public hearing involving ruling and opposition lawmakers is scheduled on the 25th regarding the EFTA amendment. Separately, an amendment to the Bank of Korea Act has been proposed in the Planning and Finance Committee. This law emphasizes that payment and settlement authority is the exclusive duty of the Bank of Korea and conflicts with the EFTA amendment.

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