Chairman Choi Jong-gu of the Financial Services Commission (FSC) at a briefing with the heads of financial companies and associations on the financial domination structures, said the transparency and responsibility between shareholders and consumers are yet to reach satisfactory levels, according to financial market watchers.
Chairman Choi suggested a number of ideas to remedy the situation, including the transparency for the appointment of CEOs and responsibility for outside directors, the power of the internal auditions and public notice of the high-level salaries, among others. The qualifications of the CEOs got the most attention at the briefing session with the FSC calling for CEO qualification standards specified in the laws and regulations. The financial authority noted that morality, fairness, and professionalism must be part of the qualifications for CEOs.
A CEO of a bank complained that only a “complete man” would be able to head a bank if the qualification includes those elements. South Korea is working towards establishing more extensive cooperation with both China and Japan with regards to regulating their burgeoning cryptocurrency markets. South Korea’s Financial Services Commission is pressing for a joint effort between regulators in all three countries in order to prevent the sector becoming a facilitator of money laundering and a number of other criminal activities.
Korean Initiative
According to a recent report, South Korea’s FSC has moved to step up its regulatory efforts and work in conjunction with the relevant agencies of China and Japan with regards to administering cryptocurrency-related activities. Choi Jong-Ku, Chairman of the FSC has revealed that the finance ministers from both countries have met with officials in South Korea to go over their findings and exchange their ideas on the matter.
Choi outlined his plan to “set up a detailed system of cooperation” between the three nations and warned members of the public against the practice of “irrational” investing during the current, ongoing “fever of speculative investment in cryptocurrencies.”
Choi also maintained his belief that digital currencies are fundamentally flawed, stating that “cryptocurrencies are unable to play a role as a means of payment.”
The talks have come at a time when the FSC is looking to ramp up its regulatory policies related to cryptocurrencies and Choi has expressed the intention to increase the severity of punishment for cryptocurrency related criminal activities and to bring in a series of new requirements aimed at regulating the nation’s banks and cryptocurrency exchanges.
The FSC is in the process of inspecting some of the country’s top banks with the Industrial Bank of Korea, Kookmin Bank, Korea Development Bank, NH Bank, Shinhan Bank, and Woori Bank all being subject to onsite inspections.
The Commission is working in tandem with the Korea Financial Intelligence Unit and Financial Supervisory Service to carry out joint inspections on the six commercial banks that offer accounts to cryptocurrency traders and exchanges in Korea.
“The inspectors will look into whether the banks comply with their anti-money laundering obligations in their transaction with cryptocurrency exchanges; and whether they have in place appropriate measures to verify their customers’ identification in regard with cryptocurrency trading.”
According to regulators, due to the anonymous nature of all cryptocurrency transactions, they are highly vulnerable to abuse by criminals. In addition, the virtual accounts offered by both banks and cryptocurrency exchanges make it even more difficult for authorities to track down the real identities of account holders.
Banks are required “to assume greater responsibility as gatekeepers to prevent such illegal activities using cryptocurrencies.”
The authorities have already ordered banks to stop issuing the virtual accounts that cryptocurrency exchanges use to manage their clients’ money and a new system designed to end anonymous trading and enforce genuine identity verification is close to being fully implemented.
