Incidents of financial fraud at Korea’s five major commercial banks have already exceeded half of last year’s total damages, underscoring persistent vulnerabilities despite efforts to strengthen internal controls.
According to disclosures on Monday, KB Kookmin, Hana, Shinhan, Woori and NH Nonghyup collectively reported 13 incidents this year, resulting in damages approaching 86 billion won ($61.4 million).
The latest figure already surpasses half of the 177.4 billion won reported in total damages for 2024, with the actual impact likely higher when including smaller incidents below the reporting threshold of 10 billion won.
The most significant single incident was at NH Nonghyup Bank on April 3, involving a breach linked to excessive external lending, with losses totaling 20.49 billion won.
At Hana Bank, an employee accepted false documentation and approved approximately 7.5 billion won in loans to a client. The individual reportedly received valuables from the client and privately lent money.
KB Kookmin Bank reported two breach-of-trust cases this year, including a 4.6 billion-won loan made with false claims that a developer and contractor were the true buyers of long-unsold commercial properties.
Shinhan Bank experienced an incident where an employee manipulated credit ratings to facilitate lending, embezzling 1.7 billion won over three years by impersonating a client involved in export-import operations.
Incidents at the five banks have surged in recent years — from 51 cases totaling 59 billion won in damages in 2020, to 40 cases reaching 822 billion won in 2022, and 86 cases with damages of 177.4 billion won last year.
In 2022, embezzlement at Woori Bank alone accounted for the majority of damages, exceeding 700 billion won.
Despite ongoing efforts to enhance internal controls, recent months have seen a resurgence in both the number and scale of financial misconduct.
In response, banks are deploying targeted measures. KB Kookmin Bank is assigning dedicated personnel to high-risk sectors, including corporate loans, wealth management and global banking, and has developed AI models to analyze staff attributes and transactional risks, aiming to detect emerging anomalies.
Shinhan Bank has overhauled its internal control infrastructure based on responsibility maps, planning to expand its scope leveraging new technologies such as AI.
Since January, Woori Bank has appointed 37 internal control specialists to conduct monthly branch audits and thematic inspections. Hana Bank is enhancing its inspection system through improved AI models and broader thematic audits.
NH Nonghyup Bank has established a new monitoring organization for branch self-audits, creating a proactive system for overseeing high-risk transactions.
hnpark@heraldcorp.com
