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| Financial Supervisory Service (FSS) headquarters on Yeouido, Seoul / Courtesy of FSS |
By Anna J. Park
The Financial Supervisory Service (FSS) is planning to shift its investigative focus from a punitive nature to a preemptive and preventive one so that financial companies as well as financial markets can maintain their integrity efficiently amid growing uncertainty.
According to its annual plan announced on Wednesday afternoon, the watchdog agency plans to conduct a total of 602 inspection sessions this year, a 5.2 percent increase from the 572 last year. The number of people involved in the inspections will also increase to 23,202, from last year's 20,425.
The FSS also said it will notify financial companies early in the year if they are slated to receive a regular inspection that year. All financial companies in Korea face regular inspections every two to five years. The notification system is expected to raise financial companies' predictability regarding the inspections, while inducing them to make voluntary improvements. The watchdog agency's inspections will be more focused on checking for systemic risks.
Yet regarding matters involving significant market risks, the FSS will conduct frequent investigations in a speedy manner to grasp the situation as soon as possible. The agency also explains that it will prioritize investigating major violations, rather than focusing on petty ones.
Specifically, the FSS plans to place importance on financial companies' risk management in liquidity and integrity, so that financial firms can prepare themselves for any drastic changes in external economic factors, including interest rates and foreign exchange rates. The financial authority will also strengthen monitoring on real estate project financing as well as risks related to financial firms' alternative investments during this year's inspections.
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