After Introduction of Rewards, Accounting Fraud Whistleblowing Doubled... 65% from Insiders

Over the past six years, the number of whistleblowing reports on accounting fraud has more than doubled, and the content of these reports has become more detailed, indicating that related systems are being operated effectively. Approximately 65% of reports were filed by insiders such as employees and executives, and about 75% of accounting fraud cases uncovered through these reports resulted in severe disciplinary actions.

According to the Financial Services Commission on May 28, the number of accounting fraud whistleblowing reports increased from only 81 in 2019 to 179 in 2024. The whistleblower protection and reward system for accounting fraud is designed to quickly detect and punish corporate accounting manipulation and to deter fraudulent practices. Once sanctions are finalized, whistleblowers are also awarded rewards. From 2019, when rewards began to be paid, to the end of May 2025, a total of 40 rewards have been granted, amounting to 1.92 billion won.

In particular, the Financial Services Commission assessed that as the accounting fraud whistleblowing system has become more active, the quality of reports has also improved. Whistleblowers have been submitting detailed evidence related to violations of accounting standards by companies and, in some cases, have appeared in person before the Securities and Futures Commission to provide specific testimony. This is considered to have contributed significantly to the financial authorities' ability to quickly detect and address accounting fraud.

Approximately 65% of accounting fraud whistleblowers were insiders such as employees and executives who are familiar with the company's internal affairs. This was followed by business partners (15%), shareholders (10%), and affiliates of subsidiaries (5%). In addition, among the accounting fraud cases uncovered through whistleblowing, about 75% resulted in severe disciplinary actions for intentional or gross negligence, and the cumulative amount of fines imposed reached approximately 24.87 billion won.

The Financial Services Commission stated, "As the accounting fraud whistleblowing system becomes more active, we expect to see an improvement in accounting transparency," and emphasized, "As an environment is being created in which corporate accounting manipulation is no longer possible, companies and auditors must make every effort in accounting practices and audits." The commission also added, "We plan to continue to promptly investigate and take action on accounting fraud whistleblowing in cooperation with relevant agencies, and will provide rewards for reports that contribute to the detection and handling of accounting fraud. If you become aware of corporate accounting fraud, we urge you to actively report it to help enhance accounting transparency."

The personal information of accounting fraud whistleblowers is securely protected in accordance with relevant laws. Anyone who discloses a whistleblower's personal information may be subject to a fine of up to 50 million won. In addition, anyone who retaliates against a whistleblower may face criminal penalties (up to two years in prison or a fine of up to 20 million won) as well as administrative fines.