FSS: "Daily On-Site Inspections at Bank Branches Crucial for Accident Prevention"

'2023 First Half Bank Sector Internal Control Workshop' Held
Banks Criticized for Repeated Financial Accidents Due to Performance Priority, Convenience Focus, and Passive Attitudes

On the 22nd, the Financial Supervisory Service (FSS) held the '2023 First Half Internal Control Workshop for the Banking Sector.' Approximately 120 internal control personnel, including compliance officers and inspection department heads from 8 bank holding companies and 20 banks, attended the event.

Kim Young-joo, Deputy Director of the FSS, stated in his opening remarks, "Regulatory improvements are being pursued to enable financial companies to establish responsible internal control systems on their own." He pointed out, "At the root of repeated large and small financial accidents in banks is a passive attitude that tolerates non-compliance with work procedures or believes that merely following the minimum legal procedures is sufficient, prioritizing business performance or convenience."

He continued, "To strengthen internal control, it is important that accident prevention functions, such as daily self-inspections at branches, operate effectively." He requested, "In the event of future financial accidents, banks should specifically identify the details, circumstances, and causes of the incidents and report important matters to the FSS promptly."

Samjong Accounting Corporation described the internal accounting control system as "a procedure to design and operate an internal control system for all business operations at the enterprise level," adding that "most financial accidents, such as embezzlement, are related to deficiencies in the internal accounting control system."

Regarding improper loan incidents involving forgery or alteration of employment and income verification documents, the FSS stated, "Improvements are needed in the business processes, such as verifying supporting documents when handling loans for individual business owners, conducting self-inspections, post-inspections, and external appraisals."

They added, "In the first half of this year, relatively simple types of financial accidents that could have been prevented through basic internal control activities have occurred in the banking sector. Banks need to enhance the specificity of accident reporting and promote frequent reporting to the FSS, while the FSS should activate the dissemination of financial accident cases to banks."

Shinhan Bank shared cases of managing long-term employees and operating job segregation systems as part of its internal control innovation measures. Woori Bank presented cases of strengthening inspection tasks, including expanding personnel, reorganizing the inspection organization, shortening inspection cycles, and adjusting inspection KPIs.

Daegu Bank shared cases of a special audit system for branches involving direct participation by executives and the reorganization of the enterprise-wide internal control system, including overseas subsidiaries.

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