New accounts face tight scrutiny

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New accounts face tight scrutiny

New financial accounts created this year will be put under the microscope by the nation’s financial watchdog to prevent illegal money laundering.

The Financial Supervisory Service (FSS) said on Thursday it will start examining the owners of new financial accounts, especially transactions of 20 million won ($16,766) or more.

The new regulation is equivalent to international rules by the Financial Action Task Force on Money Laundering (FATF), the FSS said.

The government revised the country’s Special Use of Financial Information Act last year to allow the watchdog to verify owners of financial accounts involving large transactions.

In Korea, transactions of more than 20 million won in cash, recorded nearly 8.2 million transactions in 2014, totaling 116 trillion won.

The number of suspicious transactions reported to the authority was more than 500,000 in that year, the FSS said.

Under the new rule, the FSS will identify owners of accounts by requiring real names and residential registration numbers.

For corporations, the watchdog will inspect a copy of the corporate registration or list of shareholders in order to verify actual owners of financial accounts under the names of
corporations.

Owners of company-named accounts should be one of the shareholders who hold at least a 25 percent stake in the company, those who have enough power to nominate more than half of the executives, or the largest shareholder. The enhancement of the rule will make it more difficult for companies or individuals to open new accounts than before.

Commercial banks will require their customers to report the purpose of opening a new account and submit relevant materials.

For example, in order to open an account for wages, employees should submit proof of employment and labor income withholding tax receipts. Part-time workers should also submit employers’ business licenses and employment contracts.

Some of the companies are already asking their customers to submit those documents, as they started following the FSS guidelines on prevention of creating false-name accounts last year.

“Consumers might feel inconvenienced, but such rules are internationally adopted,” said Kwon Min-soo, an official at the supervision coordination department at the FSS.

“We are elevating the level of our rules to the international standards.”

The tighter rules have drawn complaints on social networking sites from college students and housewives.

“Account refugee” is a newly coined-word referring to those who are attempting to find a bank that easily allows opening an account.

“But the latest regulation will affect corporations more than individuals,” the FSS official said.

“Companies that have created accounts under company names or chief financial officers will have to identify the real owners.”


BY SONG SU-HYUN [song.suhyun@joongang.co.kr]

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