FSS Warns of Criminal Abuse of Installment Savings Accounts and Corporate Cards... Calls for Stronger Money Laundering Monitoring

Meeting of Bank Compliance Officers

"Increase AML Staffing

and Make Greater Efforts to Enhance Expertise"

On July 1, the Financial Supervisory Service announced that it had shared information with the banking sector on key types of suspected money laundering transactions and other relevant information to enhance prevention and response capabilities against increasingly sophisticated and advanced financial crimes that threaten the livelihoods of ordinary people.

Kim Hyeongwon, Deputy Governor for Consumer Finance at the Financial Supervisory Service, held a meeting of compliance officers from the banking sector in the afternoon at the Bankers Club in Jung-gu, Seoul, attended by anti-money laundering officers from 20 domestic banks.

The meeting focused on sharing recent cases of suspected money laundering, as well as findings from Financial Supervisory Service inspections, to strengthen the banking sector's ability to respond to increasingly sophisticated and organized financial crimes targeting people's livelihoods.

According to the Financial Supervisory Service, it was found that some banks allow the opening of multiple free installment savings accounts in a short period due to the lack of restrictions on new account openings, which has led to their abuse in fraud cases involving second-hand transactions.

In response, the authorities plan to partially restrict the opening and closure of free installment savings accounts and to encourage banks to establish effective monitoring systems for customer due diligence and suspicious transaction reporting as part of anti-money laundering (AML) measures.

Another type of crime detected involves using corporate check cards with no spending limit to purchase large quantities of gift certificates, which are then resold or cashed out at sales outlets, effectively laundering criminal proceeds.

There were also cases where funds obtained through voice phishing, deposited in KRW accounts, were converted into cash by transferring the money to foreign currency accounts at other banks or to entrusted accounts at securities firms, and then withdrawing the funds in won.

The Financial Supervisory Service inspections also found that a significant number of customers with a history of having their accounts used for fraud were still being classified as low-risk for money laundering by some banks.

Many cases were uncovered in which the same mobile phone number was registered to multiple individual customers through non-face-to-face channels, raising suspicions of accounts used as "borrowed-name accounts" for fraudulent purposes.

The Financial Supervisory Service also pointed out that some banks had not made sufficient efforts to allocate AML personnel or secure the necessary expertise in proportion to their business scale.

Deputy Governor Kim explained, "Not only are scams targeting the general public on the rise, but crimes involving gambling and drugs among youth are also increasing. Methods for concealing criminal proceeds through money laundering are also diversifying, including the use of virtual assets, overseas remittances, corporate accounts, and foreign currency accounts."

He emphasized, "It is necessary for domestic banks to make even greater efforts to advance their anti-money laundering systems."

The attending banks agreed to actively cooperate in strengthening their anti-money laundering capabilities to eliminate blind spots in the fight against financial crime, based on the discussions from the meeting.

A Financial Supervisory Service official stated, "The Financial Supervisory Service will continue to advance AML systems and will communicate and cooperate with the financial sector to enable financial institutions to take a leading role in preventing financial crimes that harm people's livelihoods."

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