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SC Korea, Toss Bank hit by internal control failures
Standard Chartered (SC) Korea headquarters in Seoul / Courtesy of SC Korea
By Lee Kyung-min
Standard Chartered (SC) Korea CEO Lee Kwang-hee / Courtesy of SC Korea
Standard Chartered (SC) Korea and Toss Bank are facing growing criticism over their internal control failures, due to repeated irregularities concerning loan approvals, industry officials said Thursday.
SC Korea reported a financial fraud case of over 13 billion won ($9 million) in a Financial Supervisory Service (FSS) disclosure made Tuesday.
The misconduct continued for a little more than two years, from February 2022 to June 2024, and was uncovered in the lender’s recent internal investigation.
The lender said the case had “improper loan transactions involving fraudulent documentation.”
It said in the FSS regulatory filing that the loss has not been exacted. Whether the amount would be recovered remains uncertain.
In February, the bank reported fraudulent applications for jeonse housing deposits and unsecured loans totaling 1.47 billion won.
Jeonse is a leasehold unique to Korea. The home-renting system allows tenants to pay a refundable lump sum in lieu of monthly rent.
“The matter is currently under probe. We are unable to provide details other than what has been disclosed,” an SC Korea official said.
Toss Bank CEO Lee Eun-mi / Courtesy of Toss Bank
Similarly, Toss Bank reported embezzlements of 2.8 billion won in May and June. The cases occurred on May 30 and June 13.
The Toss employee in those cases was a team leader in the bank’s finance division. He allegedly wired company funds from a corporate account into his personal account.
At least a handful of additional attempts were made.
The case was left undetected for more than two weeks, before an internal monitoring system picked up the signs of unusual activities.
The bank tried to reach the employee for questioning about the irregularities, but was unable to get in contact with him. He was later found dead.
The bank has since reported the case to the FSS and the police.
Company fund wiring is subject to a number of approvals, including one-time password authentications from authorized personnel.
Toss maintains that the employee deceived colleagues into sharing their access, bypassing reporting and approval protocols.
However, there are layers of approval involving accounting, compliance and general affairs, leading to skepticism among some that the employee acted alone.
Police are looking into whether the employee had an accomplice.