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| The logo of KakaoBank is seen at its headquarters in Pangyo, Gyeonggi Province. Yonhap |
By Lee Min-hyung
The Financial Supervisory Service (FSS) imposed a sanction on KakaoBank for the lender's faulty programming test of an overseas remittance service.
The watchdog slapped the mobile-only lender with an institutional caution and a fine of around 150 million won ($115,000), after some users' overseas remittance transactions did not progress as they had intended.
According to the announcement by the FSS, KakaoBank violated a set of financial rules by failing to secure stability in transactions for its users.
KakaoBank failed to exercise due care in guaranteeing the accuracy of its remittance program and did not take enough time and sufficient pre-testing before opening services to customers, according to the watchdog.
The institutional caution is considered a light level of punishment that the FSS slaps on financial institutions here. When any financial firms receive tougher sanctions, such as an institutional warning and sales suspension, they cannot take over other companies for a year and are prohibited from tapping into any new businesses for a year.
KakaoBank declined to comment on the latest sanction.
"We do not have anything to share about the latest decision by the FSS," a spokesman at the lender said.
The FSS also took issue with KakaoBank's granting of credit to its major shareholders. Internet-only banks here are banned from doing so under a local financial act, but it turned out KakaoBank provided loans to executives from affiliates of its major shareholder, according to the financial authority.
When KakaoBank changed its terms and conditions on electronic financial transactions, the lender did not report the revision to financial authorities and also failed to notify its customers, the FSS said.
The FSS sent a message of warning on a total of 18 incidents under the lender and urged the company to improve its business activities in 26 areas.
The watchdog also demanded the bank come up with sophisticated measures to monitor any unusual transactions made with its cards at automated teller machines.
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