Only a fraction recovered from top five banks' financial crimes

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By Lee Yeon-woo

Despite numerous cases of financial crime at the top five banks, the recovered monetary losses appear to be minimal, according to data released on Tuesday.

According to the Financial Supervisory Services (FSS) data submitted to Rep. Yun Chang-hyun of the ruling People Power Party, such cases at the five major banks from 2019 to this July resulted in a total loss of 99.1 billion won ($74.6 million).

Five banks refer to KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH Nonghyup Bank.

The two most significant financial crimes were identified at Woori Bank and KB Kookmin Bank. Last year, Woori Bank discovered that a senior-level employee had embezzled 60 billion won. Earlier this year, an employee of KB Kookmin Bank was found to have manipulated documents to secure a housing mortgage loan amounting to 15 billion won. As the case is still under investigation, the total loss could increase.

The most common type of financial crime involves embezzlement of customer deposits or company funds. Incidents of fraud from outsiders and armed robberies at overseas branches are categorized as “financial accidents.”

However, of the total lost amount, only 10.8 billion was recovered. The delayed recognition of these “accidents” and subsequent follow-up measures are believed to contribute to this low recovery rate.

“Financial accidents, especially embezzlement, have been occurring continuously for years. It's concerning to think that even the cases we've uncovered might just be the tip of the iceberg and the amount recovered is alarmingly low,” Rep. Yun said.

“Until public trust in the financial industry is restored, banks should enhance systems, extensively suspending from work individuals responsible for managing customer deposits if they're deemed suspicious. The FSS should also ensure these systems operate effectively,” he added.