'There's a Reason for Fewer Kakao Investment Rooms'... FSS Expands Self-Regulation on Illegal Financial Ads

Introduction of self-regulation in August last year
Kakao restricts 273,000 fraudulent accounts
Google preemptively blocks illegal financial advertisements

The Financial Supervisory Service (FSS) is expanding industry-wide self-regulation aimed at eradicating illegal financial advertisements and illegal investment solicitations across the entire financial sector.

On August 5, the FSS announced that it will broaden the scope of self-regulation against illegal financial advertisements and illegal investment solicitations, which was first introduced on Kakao and Google platforms in August of last year, to the entire industry.

Since the introduction of self-regulation, Kakao has imposed usage restrictions on a total of 273,000 accounts involved in fraudulent activities. In particular, for cases of impersonating financial institution employees, the adoption of an advanced artificial intelligence (AI)-based program called FakeSignal led to usage restrictions on 221,000 accounts, an increase of 91,000 cases compared to the same period of the previous year.

Google, as the first overseas online platform, implemented the 'Financial Services Verification (FSV)' procedure to preemptively block illegal financial advertisements. As a result, the number of user reports was reduced by half, demonstrating significant effectiveness.

The FSS plans to hold an on-site meeting in August to share the achievements of self-regulation such as Financial Services Verification and to explain the necessity of its adoption.

The FSS explained that if online platforms selectively adopt self-regulation, illegal operators may migrate to platforms that have not implemented such measures (balloon effect), resulting in blind spots in protecting financial consumers. Therefore, the FSS will continue to hold discussions with relevant agencies to ensure that a system imposing responsibility on online platforms?such as mandatory efforts to prevent the distribution of illegal financial advertisements?is legislated as soon as possible.

The FSS stated, "We will more thoroughly and strongly block the distribution channels of scams and illegal financial advertisements by illegal operators, thereby making a significant contribution to creating a safer financial investment environment and preventing damage to financial consumers in the future."