Withdrawal Processing Fails at Some Airport Branch Accounts
Authorities: "Mobile App Improvement Underway, Testing Insufficient"
Some Users Notified of Processing Results Late
On the 1st, prosecutors investigating the Lime incident are conducting a search and seizure at the Shinhan Bank headquarters in Jung-gu, Seoul. It is reported that the prosecutors are securing computer files and ledgers from Shinhan Bank headquarters, which is suspected of selling the Lime Asset Management 'Credit Insured No. 1 (CI Fund)' despite knowing it was a non-performing fund. Photo by Moon Honam munonam@
[Asia Economy Song Seung-seop] Shinhan Bank has been found to have been sanctioned by financial authorities due to a withdrawal error involving approximately 250 million won in deposits.
According to financial authorities and the banking sector on the 31st, the Financial Supervisory Service recently imposed sanctions on Shinhan Bank for violating the 'Obligation to Ensure the Stability of Electronic Financial Transactions' and the 'Obligation to Notify Customers of Electronic Financial Transaction Error Corrections.' The institution (Shinhan Bank) received a caution and a fine of 31.2 million won, and one executive received a caution. Two matters requiring voluntary correction were also issued.
This sanction was due to a foreign currency deposit program error that occurred in Shinhan Bank accounts over two days starting December 11, 2019. During this period, an incident occurred where 250.23 million won worth of Korean won deposits were not processed for withdrawal in accounts at some branches, including the airport branch.
The financial authorities announced that Shinhan Bank did not comply with the 'Electronic Financial Supervision Regulations.' Current law requires financial companies to conduct sufficient testing and obtain approval from responsible personnel when applying program operating systems. The purpose is to maintain the confidentiality, integrity, and availability of information to ensure the safety of electronic financial transactions.
Authorities: Insufficient Testing During Mobile App Function Improvement
Shinhan Bank was improving the foreign currency deposit function of its mobile banking application (app) and added or changed new features at the request of another department. However, it did not conduct sufficient testing to ensure the integrity of electronic financial transactions, resulting in errors. The financial authorities explained that this violated the procedures for establishing and operating program testing and related standards.
The Financial Supervisory Service also pointed out a violation of the 'Obligation to Establish and Comply with Business Continuity Plans.' According to regulations, financial companies must establish and follow business continuity plans to prevent business interruptions even in emergencies such as system failures. These plans include response procedures for various situations, the composition and operation of emergency response organizations, and the scope and procedures for reporting and external notifications.
The authorities highlighted the scope of Shinhan Bank’s reporting. On the day the error occurred, Shinhan Bank received information from branches during daily closing that foreign currency deposits were inconsistent within the app. Although the person in charge personally confirmed the program error, they did not report the inquiry details and the failure situation to their department head or higher-level supervisors.
The violation of the 'Obligation to Notify Customers of Electronic Financial Transaction Error Corrections' was also specified. The Electronic Financial Transactions Act stipulates that financial companies must immediately begin an investigation upon recognizing an error in electronic financial transactions and notify users of the cause and handling results within two weeks. It is known that some users received related information via registered mail after the two-week period had passed. A Shinhan Bank official emphasized, "We recognized the error and tried to restore it as quickly as possible."
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