'Financial Supervisory Service Sanctions' KakaoBank and K Bank... Undisclosed Financial Transactions and Incidents of Deceased Customers

41,996 Cases Combined Over 6 Years
"Need for Internal Controls on Non-Face-to-Face Financial Transactions"
Fines Imposed for Failure to Disclose Financial Accidents

More than 40,000 financial transactions under the names of deceased customers occurred at KakaoBank and K Bank. In response, financial authorities issued management caution measures and ordered strengthened efforts for both preventive measures and post-incident inspections.

According to the Financial Supervisory Service on the 4th, from June 1, 2018, to May 31 of last year, a total of 41,996 financial transactions under the names of already deceased bank customers occurred at KakaoBank and K Bank. Specifically, at KakaoBank, there were 368 account openings, 15 loan executions, and 35,985 deposit withdrawals. At K Bank, 78 account openings and 5,550 deposit withdrawals took place.

The reason for these financial transactions is due to the non-face-to-face transaction methods of internet banks. In face-to-face financial transactions, customers must visit the branch in person, but with internet banks, transactions can be conducted with just identification and a mobile phone. If a third party such as family or acquaintances withdraws deposits or takes out loans under the name of a deceased person without proper delegation procedures, they may be subject to penalties under criminal law or the Electronic Financial Transactions Act.

The Financial Supervisory Service stated that it is necessary to strengthen efforts for both prevention and post-incident inspections to prevent financial transactions under deceased persons' names and issued management caution measures.

Additionally, KakaoBank and K Bank were fined 26.8 million KRW and 30 million KRW respectively for violating the obligation to disclose financial accidents. KakaoBank failed to disclose loan frauds amounting to 19.89 billion KRW in March 2022 and 1.53 billion KRW in April last year on its bank website, reporting only to the financial authorities. K Bank also failed to disclose loan frauds of 1.5 billion KRW in January 2022 and 1.11 billion KRW in February last year. According to the Banking Act, if a financial accident exceeding 1 billion KRW occurs, the bank must disclose it on its internet homepage within 15 days from the date of occurrence.