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Financial Incidents of Banks and Non-bank Financial Institutions * Deputy Director, Examination Planning & Coordination Team, Examination Planning & Coordination Department, Financial Supervisory Service Kim, Won* From 1999 to 2002, an average of 253 cases of financial incidents had occurred in bank and non-bank financial institutions per year involving an average of 234 billion won per year. Embezzlement and misappropriation of funds by employees of these financial institutions accounted for more than 60% of these financial incidents. Moreover, the number of cases of offering bribery to employees and robbery of financial institutions has increased from 1999 to 2002. A review of the cases indicates that the weakness of the internal control system of the financial institutions appears to be the primary reason, followed by the lack of ethics among employees and weak sanctions on the employees who committed financial incidents. In conclusion, financial institutions must furthermore strengthen their internal control systems, activate whistle blowing and impose more severe sanctions on employees who committed financial incidents. It is also recommended that the supervisory authority more closely monitor financial institutions where financial incidents had frequently occurred.


Financial Incidents of Banks and Non-bank Financial Institutions * Deputy Director, Examination Planning & Coordination Team, Examination Planning & Coordination Department, Financial Supervisory Service Kim, Won* From 1999 to 2002, an average of 253 cases of financial incidents had occurred in bank and non-bank financial institutions per year involving an average of 234 billion won per year. Embezzlement and misappropriation of funds by employees of these financial institutions accounted for more than 60% of these financial incidents. Moreover, the number of cases of offering bribery to employees and robbery of financial institutions has increased from 1999 to 2002. A review of the cases indicates that the weakness of the internal control system of the financial institutions appears to be the primary reason, followed by the lack of ethics among employees and weak sanctions on the employees who committed financial incidents. In conclusion, financial institutions must furthermore strengthen their internal control systems, activate whistle blowing and impose more severe sanctions on employees who committed financial incidents. It is also recommended that the supervisory authority more closely monitor financial institutions where financial incidents had frequently occurred.