FSS, banks draw up 'three-step defenses' to prevent foreign remittance

The Korea Times

The Korea Times

Finance

Thu, November 30, 2023 | 10:48

Economy

FSS, banks draw up 'three-step defenses' to prevent suspicious foreign remittance

Posted : 2023-06-07 16:39

Updated : 2023-06-07 17:35

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By Anna J. Park

The Financial Supervisory Service (FSS), the state-run financial watchdog agency, and local banks have decided to prevent abnormal foreign remittances by strengthening internal control and procedural codes to heighten the monitoring of such transactions.

The FSS and the country's bank association jointly announced the so-called "three-step defenses" on Monday, which describe procedural steps that a bank should follow when handling suspicious foreign remittances.

It is a follow-up measure of months of taskforce meetings held between the FSS and the bank association to prevent abnormal foreign remittance cases. Last June, financial authorities and banks caught over 83 companies that made $7.2 billion worth of suspicious remittances over the past several months through Korean banks to countries including Hong Kong under the false guise of trade. Most of the remittance transactions were illegal transfers suspected of criminal links utilizing local cryptocurrency exchanges.

Aiming to prevent recurrences, the three-step defense measures first standardize a list of items that bank branches must check in advance when requested to implement foreign remittance transactions. Second, banks should strengthen the monitoring of foreign remittances by establishing supervisory computational systems. Last, the measures require the headquarters of banks to conduct a final review of transactions. The banks should monitor transactions through anti-money laundering departments and must file a suspicious transaction report (STR) to financial authorities when evidence is found.

Banks plan to begin implementing the measures later this month. But the measures will take force gradually as implementation takes time. Financial authorities hope that the new measures could hamper suspicious attempts at money laundering using local banking transfers.

"The measures are expected to effectively prevent abnormal foreign remittances through strengthened and systemized internal controls within banks," an official from the FSS said.

annajpark@koreatimes.co.kr