[Asia Economy Reporter Bu Aeri] On the 15th, the Financial Supervisory Service (FSS) announced that it has formed a task force (TF) with the Korea Federation of Savings Banks and savings banks to establish comprehensive measures to improve internal controls. This move comes as disturbances continue, including embezzlement of project financing (PF) loans amounting to hundreds of billions of won, mainly in the savings bank industry.
The FSS has prepared separate measures for PF loans, individual business loans, fund management, and dozens of other tasks.
First, regarding PF loans, the FSS decided to clearly separate duties by department for operations such as sales, screening, fund remittance, and post-management. PF loan sales personnel will not be allowed to handle multiple tasks such as loan approval based on progress and fund remittance.
Additionally, the remittance system was improved to block the computer system from arbitrarily changing the recipient during remittance.
PF loan funds are restricted to be deposited only into pre-registered designated accounts, and the verification process was strengthened by requiring a three-step approval procedure when registering or changing designated accounts.
Multiple countermeasures against forgery and alteration of fund withdrawal requests are simultaneously implemented, establishing multi-layered safety devices.
The FSS will conduct regular and ad-hoc inspections by the internal audit and compliance departments on the appropriateness of PF loan handling by delegated savings banks.
Regarding individual business loans, the FSS will strengthen verification of submitted documents at the time of loan processing and enhance post-management and self-inspections. The FSS recently confirmed cases where construction loan organizations intervened and improperly handled business owner mortgage loans through document forgery and alteration.
Internal controls on high-value fund transactions will also be strengthened. Approval procedures for major fund withdrawals will be reinforced, and new authority limits based on cumulative remittance amounts will be established.
Document security will be enhanced, and weaknesses in the approval system will be supplemented.
Electronic approval will be the principle, but paper approval documents and external incoming documents must be mandatorily registered in the computer system.
When branch managers are absent, subordinate staff who make decisions must obtain subsequent approval from the branch manager, and internal funds disbursed by branch manager approval will be subject to focused inspections by internal audit and compliance departments.
In addition, the FSS expanded the scope of mandatory leave to include high-risk duty personnel and those who have worked long-term in the same department or role. Detailed operational standards related to the rotation system will also be specified in internal regulations.
For whistleblowers, the FSS will adjust the reward scope of the voluntary reporting system to a reasonable level and strengthen follow-up measures for non-reporting.
An FSS official stated, "We plan to monitor the operation status of improvement measures through continuous surveillance and inspections."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
