Subsidiary Companies Face Tougher Control
By Cho Jin-seo
Staff Reporter
The Financial Supervisory Service (FSS) said Tuesday that financial holding companies will now be required to send compliance officers to their subsidiaries starting this month.
The revisions are expected to give more control to the holding companies over their affiliate companies.
So far, banks and securities firms have to employ compliance officers whose job is to monitor whether employees comply with ethical standards and the companies' regulatory codes of conduct when they engage in trading or investing activities.
"Many financial firms are restructuring their governance structure toward the holding company system, so it was necessary to reflect such a change in the industry in regulations,'' said Kwak Won-sup, the official who drew up the plan at the FSS. ``Now, the banking companies have a coherent internal supervisory system, and the compliance officers will perform a core role.''
Currently, there are six financial holding companies ― Woori, Shinhan, Hana, Kookmin (KB), Korea Development Bank and Korea Investment Holdings ― while Citibank Korea is awaiting permission from the financial regulators.
The compliance officers should be appointed by the CEO of holding companies, and cannot be replaced or fired unless they breach the code of conduct.
These days, many companies in and outside of the financial industry are establishing the position of chief compliance officer to oversee and manage related issues within the organization.