Woori Financial Group Assigns Dedicated Staff to All Sales Sites
Up to 1 Billion KRW Reward for Insider Reporting
NongHyup Financial Emphasizes Strengthening Proactive Internal Controls
Shinhan Financial Accelerates Introduction of Accountability Structure and Promotes Job Rotation
To prevent a series of financial accidents such as embezzlement, the five major financial holding companies are continuously introducing measures to strengthen internal controls, including the establishment of an audit control tower and the introduction of a responsibility structure.
On the 20th, Woori Financial Group announced an internal control innovation plan focused on expanding the deployment of dedicated internal control personnel to sales sites. This plan expands the dedicated internal control personnel, who were previously only in the bank headquarters organization, to all sales headquarters at the frontline of sales. To this end, the number of personnel was increased from the existing 21 group compliance officers to a total of 54 by adding 33 internal control branch managers (branch manager level). Earlier this month, for holding companies, two IT internal control personnel were assigned within the compliance organization, and for banks, organizational restructuring and regular personnel changes were promoted, including upgrading the inspection office to an inspection headquarters and establishing a digital inspection team.
Measures to raise employees' awareness of internal control will also be introduced. First, internal control work experience will be mandatory for all employees. Even if they are not in dedicated internal control departments such as compliance, risk, or financial consumer protection, employees will be assigned to individual branch audit duties for 6 months to 1 year so that every employee can experience internal control work at least once. From the second half of the year, internal control training will be conducted for all employees. Going forward, internal control experience such as compliance monitoring and branch audits will be reflected in branch manager promotion evaluations.
There is also a plan to strengthen the anonymity of internal whistleblowing to eliminate blind spots. Although reporting is possible through the company intranet, considering that reporting may be passive due to concerns about identity exposure, an external reporting channel has been added. By accessing the anonymous reporting specialized service "Helpline" and submitting records of internal control violations, the holding company will review and respond with results. Whistleblowers will also be rewarded with up to 1 billion KRW.
NongHyup Financial also held a compliance monitoring council on the 18th to discuss the introduction of the 'internal control responsibility structure diagram' and other matters. The internal control responsibility structure diagram is a system recently introduced by financial authorities to allocate internal control responsibilities to each executive of financial companies and clarify accountability in case of violations. Lee Seok-jun, chairman of NongHyup Financial, stated, “The best way to gain trust and confidence from consumers is not involuntary and passive internal control by supervisory authorities but voluntary and active internal control strengthening by financial companies,” urging autonomous internal control enhancement.
Shinhan Financial Group also expressed its intention to introduce the internal control responsibility structure diagram early. On the 3rd, Jin Ok-dong, chairman of Shinhan Financial Group, announced, “We will introduce the internal control responsibility structure diagram early after the enactment of the law.” In addition, through early this month’s regular personnel changes, long-term employees in headquarters departments and branches were actively rotated. The scale of transfers increased by about 26% compared to the regular personnel changes in the second half of last year to promote more active rotation. At the end of last year, the compliance management department, an internal control control tower, was established, and internal control team leaders were assigned to each regional headquarters.
KB Kookmin Bank has strengthened cash inspections from this year by conducting surprise cross-checks by employees from different branches. For branches judged to have a likelihood of accidents, continuous audits are also conducted. To expand the effectiveness of the whistleblowing system, whistleblowing has been made mandatory, and preferential measures for employees who comply have been strengthened. Hana Bank also stated that personnel with sufficient internal control experience perform tasks and continuous education is conducted to spread the internal control culture in sales sites.
Meanwhile, the number of embezzlement incidents in the banking sector reached a total of nine in the first half of this year. According to data submitted by the Financial Supervisory Service to Yang Jeong-sook, a member of the National Assembly’s Political Affairs Committee, there were nine embezzlement incidents in domestic banks up to June this year, amounting to 1.61 billion KRW. By bank, Shinhan Bank had the largest amount of embezzlement incidents (717 million KRW), accounting for about half of the total embezzlement amount in the banking sector. This was followed by two cases at Industrial Bank of Korea (322 million KRW), one case at Kookmin Bank (200 million KRW), and one case at NongHyup Bank (200 million KRW).
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