Photo courtesy of Yonhap News

 

 

[Alpha Biz= Paul Lee] South Korea’s Financial Supervisory Service has imposed a regulatory sanction equivalent to a warning on a KB Life Insurance executive, who served as the company’s compliance officer, for improperly operating the firm’s anti-money laundering systems, according to financial industry sources on Feb. 28.

The sanction was issued in the form of a notice of regulatory violations applicable to a former executive.

According to the FSS, KB Life had established procedures to assess the risk of money laundering and other illicit financial activities as part of its customer due diligence process, but failed to operate the system appropriately and did not conduct sufficient monitoring.

As a result, the insurer did not carry out proper risk assessments for a significant number of customers, leading to the failure to identify dozens of high-risk clients.

Under South Korea’s Act on Reporting and Use of Specified Financial Transaction Information, financial institutions are required to establish and properly operate procedures and internal guidelines to assess money laundering risks.

The regulator also found that KB Life failed to obtain additional information—such as the purpose of transactions and the source of funds—when conducting insurance policy loan transactions with high-risk customers, including foreign nationals.

The law requires financial institutions to verify transaction purposes and sources of funds when there is a risk that a customer may be involved in money laundering.

 

 

 

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