Financial Services Commission Vice Chairman Kwon Dae-young speaks during a meeting held to discuss responses to evolving phishing scams at Government Complex Seoul, Thurday. Courtesy of FSC
Korea is stepping up its fight against financial scams by allowing banks to swiftly freeze accounts tied not only to voice phishing, but also to newer forms of fraud such as romance and investment scams that had previously fallen into regulatory gray areas, government officials said Thursday.
The Financial Services Commission (FSC), the country's top financial regulator, said it will introduce new guidelines in June that enable closer cooperation between financial firms and law enforcement agencies to quickly suspend accounts suspected of involvement in emerging scam schemes.
The measures were discussed at a meeting chaired by FSC Vice Chairman Kwon Dae-young and attended by officials from the Korean National Police Agency, Korea Financial Intelligence Unit, Financial Supervisory Service, industry associations and major commercial banks.
The move aims to allow authorities to apply existing laws more proactively to protect potential victims and block the movement of illicit funds.
Since the authorities launched ASAP — the artificial intelligence-based Anti-Phishing Sharing & Analysis Platform — last October, 5,261 payment suspensions had been carried out through April, preventing an estimated 47.46 billion won ($31.5 million) in losses.
However, until now, banks had limited room to respond to newer scam types because they were not clearly classified as voice phishing under current law. While firms could identify suspicious money flows between accounts, they often could not verify the underlying transactions, prompting a more conservative interpretation of regulations.
Under the new framework, financial firms will be able to impose emergency freezes of up to 72 hours on accounts suspected of fraudulent activity, regardless of the scam type. If police later determine the case to be a form of emerging phishing fraud, authorities will move to formally suspend transactions and accelerate investigations and arrests.
The government also plans to establish a sectorwide fraud detection system capable of identifying emerging scam patterns as well as mule accounts used to move illicit funds.
Authorities plan to test the accuracy of the new detection models through industrywide simulations by July before finalizing common rules in the third quarter. The system is first set to be introduced across the banking sector before expanding to areas that have received less regulatory scrutiny, including virtual accounts and installment savings accounts used in the card industry.
Source: Korea Times News
