Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Strengthened internal control regulation on financial companies to take effect
Financial Services Commission (FSC) / Korea Times file
By Anna J. Park
Financial firms required to submit 'responsibilities map' to authorities
Starting Wednesday, financial companies will officially be obligated to submit their own responsibilities map — a comprehensive document aimed at strengthening internal control by assigning detailed responsibilities to each executive, financial regulators announced Tuesday.
This obligation comes as the revision of the Act on the Corporate Governance of Financial Companies takes effect from Wednesday.
Having passed the National Assembly last December, the revision obligates domestic financial companies to prepare and submit the maps to clearly define the scope of accountability of each executive. It is the financial authorities' response to continuous occurrences of financial incidents, such as embezzlement by bank employees. It aims to curb such incidents by strengthening financial companies' internal control system.
A total of 63 banks and financial holding companies are required to submit their responsibilities maps to the financial authorities by Jan. 2 next year. The submission deadline for other financial companies and insurance companies with total assets exceeding 5 trillion won ($3.6 billion) or those with operational assets exceeding 20 trillion won falls on July 2 next year. As for the remaining specialized credit financial companies and mutual savings banks, their submission deadlines will fall in July 2026 and July 2027, respectively.
As the first-ever deadline for submitting responsibilities maps for financial holding companies and banks is set for next January, companies can still take some time to prepare the documents.
To promote compliance with the newly imposed requirement across the financial industry, the financial authorities released a guidebook, Tuesday, containing detailed information on how to write and submit the responsibilities structure map, answering a range of common questions from the financial sector. The financial authorities also said that they will allow a pilot period until January so that companies can receive consultations where required.
"Since the financial authorities plan to provide specific consultations for financial companies on their required documents during the pilot period, those companies that have their responsibilities maps ready and submit them early during this period will have more time to make any necessary corrections," said an official from the Financial Services Commission (FSC), Korea's top financial regulator.
The official highlighted that CEOs and other executives must make sure that there are no omissions, duplications or excessive concentrations of responsibilities when preparing the documents.
At small financial institutions or branches of foreign financial companies in Korea, which tend to have a limited number of executives here, it is common for executives to be assigned a variety of responsibilities due to their organizations' unique operational characteristics.
However, when it comes to domestic financial companies' overseas branches, where Korean financial authorities cannot exercise supervision, there is no need to assign responsibilities for compliance with foreign laws. Still, it is necessary to assign responsibilities related to the management of overseas branches to the executives, with regard to matters that could impair the soundness of financial companies back in Korea.
The responsibilities map should be confirmed through a resolution of the board of directors. If any changes need to be made to the documents, they must also be approved by the board and then re-submitted to the financial authorities.