Financial Supervisory Service Chief: "Sanctions on CEOs Responsible for Internal Controls in Financial Firms Should Be Approached with Caution"

[Asia Economy Reporter Song Hwajeong] Lee Bokhyun, Governor of the Financial Supervisory Service (FSS), stated that while it is possible to hold responsible persons such as CEOs accountable in cases of internal control issues within financial companies, a cautious approach is necessary.

At a press briefing held at the FSS on the 16th, Governor Lee was asked about the extent to which supervisory responsibility could be imposed regarding the embezzlement case at Woori Bank. He responded, "I do not believe that holding responsible persons such as CEOs accountable is completely out of the question due to the lack of effective internal control standards," adding, "In some cases, responsibility may need to be assigned."

However, he emphasized the need for a cautious approach. Governor Lee explained, "Regarding the 70 billion KRW embezzlement case at Woori Bank, it seems there are more factors to consider now than simply thinking that holding someone accountable in June or July would be the end of it," and added, "There is a fundamental principle that a cautious approach is necessary when directly holding the chief operating officer of a financial institution accountable unless the content and scope are reasonably acceptable."

Regarding large-scale abnormal foreign exchange transactions, inspections are planned not only for Woori and Shinhan Banks but also for others. Governor Lee said, "Due to fairness issues, if other major financial institutions have transactions of a similar scale to Woori and Shinhan Banks, inspections should be conducted," and added, "Whether there is collusion with companies and why the head offices were unaware of such abnormal transactions will likely be revealed through inspections." He further stated, "Inspections of Woori and Shinhan Banks are more than halfway complete, and inspections for several other financial institutions need to be newly conducted," adding, "Although sanctions or disciplinary actions have not yet been decided, issues such as system improvements or internal control-related matters have surfaced and need to be considered together."

Governor Lee identified the most urgent task for the FSS as stabilizing the financial market through soundness and liquidity management. He said, "Over the past six months, some issues have become public while others have not, but from my perspective, I have been managing these matters with great urgency," and added, "Although understanding of the adverse factors currently occurring has improved, the need for management remains high, so resolving soundness and market instability by the end of the year is the first priority."