"Poor Management of Suspicious Transactions"... Financial Supervisory Service Sanctions Naver and KakaoPay

Unreasonable Operation of Suspicious Transaction Extraction Criteria
Insufficient Anti-Money Laundering Related Tasks

Naver Financial and Kakao Pay were sanctioned by authorities for having unreasonable criteria to filter suspicious transactions and deficiencies in anti-money laundering (AML) operations.

According to the financial sector on the 27th, the Financial Supervisory Service (FSS) recently notified Naver Financial, the operator of Naver Pay, and Kakao Pay of seven and four improvement items, respectively.

Naver Financial and Kakao Pay were requested by the FSS to improve after operating some extraction criteria for monitoring suspicious transactions unreasonably.

In the case of Naver Financial, the FSS pointed out that some of the extraction criteria to filter suspicious transactions were unreasonable and did not align with the company's circumstances, urging improvements. They also failed to conduct appropriateness checks and report to responsible personnel on cases excluded from suspicious transactions. Regarding AML operations, the FSS demanded improvements due to somewhat insufficient existing customer verification.

Kakao Pay was also criticized for having unreasonable aspects, such as the customer risk assessment model operation not aligning with the company's customer policies. The selection procedures for external audit firms and the scope of audits related to AML operations were not established in internal regulations, and the independence of audit operations was also deemed insufficient.

Meanwhile, the National Credit Union Federation of Korea was also pointed out by the FSS during an inspection to improve three items, including customer verification processing and the management and operation of the AML system.