Reason for proposal and main contents

As TMON and WeMakePrice had been in capital impairment due to a long-term deficit, the Financial Supervisory Service (FSS) established two management improvement plan agreements in June 2022 and again in December 2023 in accordance with Article 42 (2) of the Electronic Financial Transactions Act in order to enable them to establish a separate trust for unsettled sales payments so as to protect sellers and consumers. However, although TMON and WeMakePrice did not execute these management improvement plans, the FSS did not take any action. This neglect of supervision by the FSS led to reckless fund management by TMON and Wemakeprice, including the use for purposes such as financing the acquisition of foreign companies. Ultimately, in July 2024, this resulted in a large-scale financial incident where TMON and WeMakePrice were unable to settle substantial sales payments.

Meanwhile, the FSS stated that it knew that TMON and WeMakePrice had not established a separate trust for unsettled sales payments, contrary to the management improvement agreements, and that they had issues with fund management, but it could not take any effective action or supervision due to the absence of a legal basis, other than establishing a management guide standard for, and making management improvement agreements with, electronic financial companies under the Electronic Financial Transactions Act. Article 42 of the Electronic Financial Transactions Act assigns the Financial Supervisory Service the authority to issue an order to restrict capital increases and dividends if the management guide standard is not complied with (Paragraph 3), and to issue executive improvement orders or make dispositions of business suspension/cancellation if the potential occurrence of a financial accident is clear (Paragraph 4); however, in the case of registered electronic financial companies, there is no base regulation for imposing sanctions or suspending a business in the event of its failure to satisfy the management guide standards or management improvement agreements.

Therefore, the proposed revision aims to prepare the base regulations for preventing damages to large-scale consumers or sellers, such as those seen in the TMON and WeMakePrice incidents. Specifically, for registered electronic financial business operators with high revenue or transaction volume—those with an annual average revenue of over KRW 100 billion based on the past three fiscal years—the administrative actions such as capital increase and dividend restriction orders, executive replacement orders, or business suspension/cancellation are allowed if they fail to meet management guidance standards, similar to electronic financial companies running business with permission (Newly established Article 42 (5) and Article 42 (6) of the draft).