Under the amended Act on Corporate Governance of Financial Companies, effective as of July 3, 2024, the representative director (or equivalent officer) and officers of a financial institution who should be included in its responsibilities map are subject to managerial obligations for the company’s internal controls and risk management in relation to their respective responsibilities. Responsible Officers who breach such obligations may become subject to personal sanctions, although sanctions may be reduced or exempted in consideration of the background, severity, and results of the relevant misconduct, as well as whether the Responsible Officers exercised reasonable care.
To enhance the predictability and transparency of sanctions issued for violations of the internal control management obligations, in July, financial authorities prepared the “(Proposed) Sanctions Operation Guidelines for Violation of Obligation to Manage Internal Controls.” After months of consulting with various industry and academic stakeholders, including banks, on December 11, 2024, the authorities finalized and enforced the “Sanctions Operation Guidelines for Violation of Obligation to Manage Internal Controls.” In the attached file we summarize the key terms of the Sanctions Guidelines, focusing on the major changes from the Proposed Sanctions Guidelines.
