The headquarters of Shinhan Bank in central Seoul / Courtesy of Shinhan Bank
By Anna J. Park
The Financial Supervisory Service (FSS) has asked Shinhan Bank to improve its anti-money laundering (AML) management system, particularly in the areas of digital asset businesses and overseas branches.
According to the financial industry Monday, the FSS made the recommendation at the end of last month to bolster the bank's AML system, reflecting the financial watchdog's previous inspection results. The FSS discovered that Shinhan Bank did not have a separate organization or staff dedicated to identifying digital asset-related transactions and assessing risk factors involved in virtual asset management.
In addition, the bank did not have a computer system to monitor digital asset-related transactions. The FSS urged the bank to allocate enough staff and to set up its computer system so that the bank can properly assume its monitoring role to identify digital asset-related transactions and assess the risk factors entailed.
The financial authorities also asked Shinhan Bank to make it obligatory to conduct regular AML inspections on its overseas branches, as the FSS saw that some overseas branches of Shinhan have long been left out of the bank's AML inspections for a long time.
The lender was also told to strengthen its check-up procedures when dealing with foreign exchange transactions. Specifically, the FSS advised the bank to enlarge its database over people or corporate entities subject to financial sanctions, when it comes to foreign exchange transactions.
Lastly, the FSS pointed out that Shinhan Bank needs to overhaul its work procedures related to the suspicious transaction report (STR) and the currency transaction report (CTR) system.
Regarding the FSS' series of recommendations, Shinhan Bank vows to implement them proactively.
"Shinhan Bank has begun implementing the FSS' recommendations that could be immediately administered, such as making improvements in computer systems, and plans to implement the rest of the recommendations within its set period, so that the bank completely follows through the FSS' demands," an official from Shinhan Bank said.
In September, the FSS announced that over 10.1 trillion won ($7.2 billion) worth of money was remitted to overseas entities in suspicious transactions during the past 12 months. While various banks have been found to be involved in the wire transactions, Shinhan Bank turned out to have sent the largest amount: 2.3 billion won. Most of the transactions were estimated to be related to arbitrage opportunities, using the price differences of cryptocurrencies at local and foreign coin exchanges.
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