Meeting at Naver Headquarters in Bundang, Seongnam
First Regular Inspection of Naver Financial in Four Years
Ten Companies Including Naver, Kakao, and Toss Attend
The Financial Supervisory Service (FSS) visited the headquarters of Naver Pay (Naver Financial) and held a meeting with the CEOs of 10 fintech and electronic payment gateway (PG) companies. This was to communicate supervisory directions to the industry under the newly established Electronic Financial Supervision Bureau and Electronic Financial Inspection Bureau, as the first regular inspection of Naver Financial in four years is underway. The FSS ordered strict management of prepaid recharge funds and settlement funds to prevent a recurrence of the 'second Tmon-Wemakeprice (Timep) incident.'
On the 12th, the FSS announced that it held a meeting at Naver Financial’s headquarters in Seongnam, Gyeonggi Province, with Lee Geun-ju, chairman of the Fintech Industry Association, and 10 CEOs of major electronic financial companies. This was the first CEO meeting of electronic financial companies since the establishment of the Electronic Financial Supervision Bureau and Electronic Financial Inspection Bureau. From the FSS, Lee Jong-oh, Deputy Director of Digital and IT, and the heads of the Electronic Financial Supervision and Inspection Bureaus attended. From the industry, participants included Park Sang-jin, CEO of Naver Pay; Shin Won-geun, CEO of Kakao Pay; Lee Seung-geon, CEO of Viva Republica (Toss); Jeong Chan-mook, CEO of Coupang Pay (all simple payment companies); Park Joon-seok, CEO of NHN KCP; Im Han-wook, next CEO of Toss Payments; Kim Kwang-cheol, CEO of Nice Payments; Moon Byung-rae, CEO of Payup (PG companies); Kim Hyung-woo, CEO of Travel Wallet; and Kim Tae-hoon, CEO of Bank Salad (fintech companies).
The FSS conveyed supervisory directions, current issues, and requests. Regarding supervisory directions, the FSS stated, "Inspections will focus on consulting rather than detection or sanctions," but added, "We will strictly respond to financial accidents such as information leaks or system failures that cause consumer harm, as well as illegal or unfair acts that infringe on consumer rights." They also said, "We will thoroughly examine various IT-related risk factors."
The FSS emphasized that the industry must strictly manage prepaid recharge funds and PG company settlement funds. First, they urged thorough implementation of the amendment to the Electronic Financial Transactions Act announced by the Financial Services Commission in September last year. The amendment requires PG companies to obligatorily manage 100% of sales proceeds separately through deposit, trust, or payment guarantee. It also states that the Financial Services Commission can issue prompt corrective measures to electronic financial companies if violations are detected. The FSS said, "We are preparing guidelines for separate management of PG company seller settlement funds to prevent a recurrence of the 'Timep incident,'" and requested the industry to prepare without delay.
They also ordered that AI algorithms be operated so as not to distort or infringe on consumer choice. They demanded continuous verification of AI algorithms to prioritize consumer benefits over financial company profits. They further stated that security controls related to new IT risks arising from the use of new technologies should be strengthened, and disaster recovery centers capable of emergency operation should be established to enhance safety.
The industry requested that the FSS provide clear guidelines or explanatory documents from the Electronic Financial Supervision Bureau and Electronic Financial Inspection Bureau. Given the diverse business types of electronic financial companies, such as simple payments, PG, and fintech (loan brokerage and management services), they suggested applying reasonable differentiated regulations. They especially asked for sufficient consideration of industry characteristics, as there are significant difficulties in establishing disaster recovery centers and fulfilling anti-money laundering (AML) obligations.
The FSS stated, "We will continuously and repeatedly inspect the core and vulnerable areas of fintech and big tech (large information technology companies) to encourage companies to improve and correct deficiencies on their own," and added, "Through efficient ongoing monitoring and inspections, we will proactively check and respond to factors causing consumer harm and inconvenience."
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