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Organization :
Financial Services Commission (FSC), Financial Supervisory Service (FSS)
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Regulation :
Article 3-2 of the Act on Real Name Financial Transactions and Confidentiality, Article 4 of Enforce
Grievance
- Under the Act on Real Name Financial Transactions and Confidentiality in Korea, real name of the customer should be verified for every financial transaction such as opening or closing accounts at the A in Korea,
- Foreign investors planning to invest in Korea from overseas must submit notarized power of attorney for real name verification stating that a local resident is designated as a proxy.
- Even if the concerned foreign customer already owns another savings account or already has history of other transactions, the person should verify real name in person to open a new savings account, or for derivatives or bond transactions.
- The system will be an obstacle to attract foreign customers and it is too cumbersome for foreign investors to visit the bank in person or submit the power of attorney for every real name verification.
- In other countries, there are systems such as Know Your Customer (KYC) or Customer Due Diligence (CDD), but those systems do not request real name verification to the customer as strictly as Korea’s.
- The real name verification for opening an account needs to be eased for foreigners living outside of Korea.
Resoultion and Results
- After receiving the grievance, the Office of Foreign Investment Ombudsman (OFIO) contacted the Financial Services Commission (FSC) and requested the agency’s opinion on the matter, and the issue was introduced as the agenda item for the FIAC meeting. The FSC collected other foreign banks’ opinions and came up with improvement measures.
(Improvement measures) - For the issuance of the Foreign Investment Registration Certificate (FIRC), the notarized power of attorney is not repeatedly required if the proxy of the specific financial transaction is the same person.
- If the proxy of the specific financial transaction is not the same person, the notarized power of attorney is required in principle. However, the “notarization” condition is deleted under the Act on Real Name Financial Transactions and Confidentiality and it is left to the discretion of the financial firms (authoritative interpretation allowed).
