"Domestic Banks Remain Unchanged Despite 100 Billion Won Fine, Foreign Firms Account for Half of Anti-Money Laundering Staff"

Domestic Banks Average 67 Anti-Money Laundering Staff... Half the 121 of Foreign Banks
Rep. Hong Seong-guk: "Far Below Global Trends, a Major Issue... Financial Authorities Must Act"

[Asia Economy Reporter Jo Gang-wook] In April of this year, IBK Industrial Bank of Korea was fined 100 billion won in the United States for violating the Anti-Money Laundering Act. Meanwhile, the five major domestic commercial banks invest only about half the personnel and budget in anti-money laundering compared to foreign banks, raising concerns that awareness remains insufficient.

According to data submitted by the Financial Intelligence Unit (KoFIU) to Hong Sung-guk, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, as of September this year, the average number of anti-money laundering personnel at the five major domestic commercial banks?KB Kookmin, Shinhan, Woori, Hana, and NH Nonghyup?was 67.

In contrast, foreign banks (Citibank Korea, Standard Chartered Bank Korea) had an average of 121 personnel, about twice as many as domestic banks.

According to the semi-annual reports submitted to the Financial Supervisory Service by each bank in June this year, the average number of employees working at domestic banks was 15,403, much larger than the 3,878 employees at foreign banks. Although the total workforce is four times larger, the number of personnel dedicated to anti-money laundering is only half.

The investment budget also fell far short of that of foreign banks. Over the past three years, the average annual budget invested in anti-money laundering?including IT system development, training, and consulting?was 6.05 billion won for foreign banks, while domestic banks spent only 3.62 billion won. The bank with the highest investment was Citibank Korea, with an average annual budget of 7.6 billion won, while the lowest were KB Kookmin Bank and NH Nonghyup Bank, each with about 2.4 billion won, roughly one-third of Citibank Korea's budget.

International financial markets are increasingly strengthening anti-money laundering standards and sanctions. However, domestic banks have continued operations without clear improvement intentions. Recently, after IBK Industrial Bank of Korea was sanctioned with a 100 billion won fine by U.S. prosecutors and financial authorities for anti-money laundering violations, they hurriedly began reviewing their internal control systems.

Assemblyman Hong pointed out, “Globally, the scope of anti-money laundering is expanding to non-financial sectors, but financial institutions that should set an example are still responding complacently, which is a serious problem,” and emphasized, “Since raising awareness and improvement are urgent, financial authorities including the Financial Intelligence Unit must actively support these efforts.”