FSS closes down Washington office following government pressure

The headquarters of Financial Supervisory Service located on Yeouido, Seoul / Korea Times file

Questions remain over effectiveness of closing key overseas office

By Anna J. Park

The Financial Supervisory Service (FSS) closed down its Washington office recently following mounting pressure from the government to cut its budget spending.

According to the FSS Wednesday, the last head of the financial watchdog's regional office in Washington returned to Korea earlier this month, and no replacement has been made.

“The Washington office is no longer in operation,” an official from the FSS told The Korea Times over the phone.

Regarding questions over when and how the closure decision was made, the FSS official explained discussions about closing down the overseas office in the U.S. capital had continued for the past few years, as the Board of Audit and Inspection of Korea (BAI Korea) recommended in 2017 that the financial watchdog should cut its spending on overseas offices.

Accepting the suggestion, the FSS scrapped plans to launch a regional office in Singapore and closed down its Hong Kong office in 2019. Following the closure of the Washington office, the FSS now has six overseas offices in operation ― New York, London, Frankfurt, Hanoi, Tokyo and Beijing.

BAI Korea's rationale for the closure of the FSS' Washington office was that there are no local branches of Korean financial institutions in the U.S. capital. It also pointed out that the office's role could overlap, because there are a few other Korean officials already dispatched from the nation's finance ministry and the FSS either at the Korean Embassy in Washington or at international organizations located there, such as the World Bank.

However, questions remain whether BAI Korea's recommendation to shutter the FSS' overseas offices is effective, particularly at a time when more and more Korean financial institutions are moving to expand their presence in the global market.

Furthermore, the assigned roles of FSS the officials dispatched to either at the Korean Embassy or other international financial organizations in Washington do not exactly overlap. The FSS' main role in overseas offices is to network not only with Korean companies' overseas branches, but also to strengthen international cooperation with local financial regulators and watchdogs.

BAI Korea's pressure to cut down the FSS' office in the U.S. capital is also drawing criticism from market insiders since Washington is home to major financial organizations, including the Federal Reserve Board, International Monetary Fund and World Bank.