Why Are Banks Like This... This Time Daegu Bank Opened Accounts Without Customers Knowing

Embezzlement, Illicit Gains, and Illegal Account Openings in One Week
Banking Sector's Weak Internal Controls Under Renewed Scrutiny

Some employees of Daegu Bank secretly forged documents and opened about 1,000 accounts, prompting the Financial Supervisory Service to launch an investigation. Following a large-scale embezzlement incident at BNK Gyeongnam Bank and a stock trading scandal involving the use of undisclosed important information at KB Kookmin Bank within just a week, voices condemning the poor internal control systems in the banking sector are growing louder.

According to the financial sector on the 10th, the Financial Supervisory Service began an emergency inspection the day before regarding allegations that Daegu Bank arbitrarily opened deposit-linked securities accounts without customers' consent. The FSS became aware of the incident through an external tip-off and immediately started the inspection considering the seriousness of the matter.

Since August 2021, Daegu Bank has introduced and operated a service that allows multiple securities accounts to be opened linked to the bank’s deposit and withdrawal passbooks. Some employees at Daegu Bank branches are suspected of increasing securities account opening performance by opening additional securities accounts without obtaining consent from customers who had opened one securities account.

For example, employees copied the securities account opening application form for Securities Company A, which customers filled out at the branch, then modified it to arbitrarily open overseas futures accounts with the same securities company or opened accounts with Securities Company B. To conceal these unauthorized account openings, they also blocked SMS notifications that inform customers about account openings. This incident came to light when a customer recently discovered that an account had been opened without their consent and filed a complaint with Daegu Bank.

An FSS official said, "This incident may constitute a violation of the Real Name Financial Transactions Act and forgery of private documents," adding, "We will thoroughly inspect all accounts suspected of being arbitrarily opened and take strict action against any illegal or improper conduct revealed by the inspection."

However, it is reported that Daegu Bank was aware of these issues but did not report them to the FSS. After receiving the complaint on June 30, Daegu Bank has been conducting an internal audit since July 12, but the FSS immediately launched an inspection upon recognizing the seriousness of the incident.

Inside and outside the financial sector, there is concern that this incident could become a burden for Daegu Bank, which is preparing to convert into a commercial bank depending on the severity of the case. Daegu Bank previously formed a task force team (TFT) with DGB Financial Group to prepare for the conversion to a commercial bank. The FSS stated, "We will investigate why Daegu Bank did not promptly report the matter to the FSS despite being aware of it and will hold them accountable if any issues are found."

Meanwhile, serious financial incidents have been occurring frequently in the financial sector recently. At Gyeongnam Bank, an employee who worked in the Investment Banking Division for 15 years embezzled about 56 billion KRW related to a real estate project financing (PF). At Kookmin Bank, employees in the securities agency department were found to have gained unfair profits of about 12 billion KRW by using undisclosed important information while handling a free capital increase for a listed company. Authorities are reportedly recognizing the seriousness of these consecutive financial incidents and are reviewing the internal control status of banks.

A Daegu Bank official said, "There is a possibility of unsound business practices related to securities account openings, and the bank’s inspection department has started a special investigation, currently conducting explanation procedures with each employee," adding, "If it violates sound management principles, strict measures will be taken."

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