Chinese banks operating in Korea that violated reporting obligations were sanctioned by the Financial Supervisory Service (FSS).
On the 22nd, the FSS discovered during inspections of the Seoul branches of Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank that they had violated the disclosure and reporting obligations regarding the appointment and dismissal of executives, or the reporting obligations related to collateral loans secured by equity securities exceeding 20%. The FSS imposed sanctions, instructing the respective executives to handle the matters voluntarily.
Financial institutions must report to the FSS within seven business days when appointing or dismissing executives. However, the Seoul branch of Industrial and Commercial Bank of China failed to report or disclose on the Korea Federation of Banks website four cases of executive appointments and dismissals between January and March 2018 within the deadline. Similar issues occurred seven times from August 2020 to September 2021.
The Seoul branch of Industrial and Commercial Bank of China also failed to timely report 43 cases of collateral loans secured by equity securities exceeding 20% of other companies from November 2017 to May last year.
The Seoul branch of Agricultural Bank of China was also caught delaying reports to the FSS regarding nine cases of collateral loans secured by equity securities exceeding 20% of other companies from December 2018 to December 2020.
The Seoul branch of China Construction Bank reappointed a former branch manager in July 2020 but failed to report this to the FSS within the deadline. It was also revealed that the branch failed to timely report the dismissal of a branch manager and the appointment of a new one in March last year.
The Seoul branch of China Construction Bank violated reporting obligations for collateral loans secured by equity securities 38 times from November 2017 to December 2020, and seven times from April 2021 to March last year, as uncovered during the FSS inspection.
A domestic commercial bank official pointed out, "Domestic banks operating in China have paid large fines for violations such as reporting obligation breaches, but penalties for Chinese banks violating regulations in Korea are relatively light."
In fact, Chinese financial authorities imposed a total fine of 17.43 million yuan (approximately 3.1 billion KRW) last year on Woori Bank China, Hana Bank China, and IBK Industrial Bank of Korea China. In April last year, the State Administration of Foreign Exchange (SAFE) in China notified Woori Bank China of a fine of 200,000 yuan (about 36 million KRW) for errors in international balance of payments reporting and statistical reporting.
In June last year, the Beijing Banking and Insurance Regulatory Commission fined Woori Bank China 900,000 yuan (about 160 million KRW) for inadequate verification of the use of personal business loans and negligence in handling foreign currency payment guarantees. In September last year, the Guangdong branch of SAFE fined Hana Bank China 15.76 million yuan (about 2.82 billion KRW) for negligence in handling foreign currency payment guarantees. This was the largest single fine imposed by overseas financial supervisory authorities on Hana Bank since its merger with Korea Exchange Bank.
In December last year, the Suzhou branch of China Industrial Bank was fined 570,000 yuan (about 102 million KRW) by the Suzhou Foreign Exchange Administration for omissions in external reporting and insufficient verification of remittance documents.
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