FSS urges financial firms to tighten overseas risk management

The Financial Supervisory Service called together overseas business managers from major financial firms Wednesday to urge stronger risk management, warning that local regulators in key markets are stepping up scrutiny of information technology and anti-money laundering practices.

The FSS held a forum on supporting financial firms' overseas expansion at the Korea Federation of Enterprises in Yeouido, Seoul, chaired by Senior Deputy Governor Lee Se-hun. The meeting covered key issues facing firms operating abroad, along with their difficulties and recommendations.

"Amid growing uncertainty in the global financial environment — including heightened interest rate and exchange rate volatility and persistent geopolitical risks — financial firms need to focus on qualitative improvement and stronger risk management across their overseas business strategies," Lee said. He added that "as IT and AML supervision, inspections and sanctions are tightening in the United States and Southeast Asian countries where Korean financial firms are most active, head-office-level monitoring and preemptive responses are critical."

As of the end of September last year, South Korean financial firms operated 475 overseas offices across 46 countries — comprising 246 local subsidiaries, 119 representative offices and 110 branches. The United States had the largest presence, with 64 offices.

The FSS said it communicates with financial authorities in major host countries through its overseas office network and other cooperative channels to help domestic firms navigate shifting regulatory environments. It is also working to open direct communication channels between Korean financial firms and foreign regulators through seminars that invite overseas supervisory authorities.

Senior executives in charge of global operations at 10 financial firms attended the forum and shared difficulties and recommendations related to licensing and local business operations in Southeast Asia and other key markets. They pledged close cooperation, including the prompt sharing of local trends and major issues identified through their overseas operations.

The FSS said it plans to hold forums and briefings regularly to support financial firms' overseas expansion and will continue gathering feedback from the field through working-level consultative bodies.

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