“This will be the first case in which the CEO is held accountable…Improvement of security vulnerabilities in the Electronic Financial Transactions Act registration”
“Bill to improve corporate governance of financial companies, under discussion between the party and government”
(Seoul = Yonhap News) Reporters Bae Young-kyung, Kang Soo-ryeon, and Kim Ji-yeon = Financial Supervisory Service Commissioner Lee Chan-jin said on the 19th about the easing of network separation regulations that the authorities are pursuing under the motto of 'defending artificial intelligence (AI) hacking attacks with AI', saying, "It is a bit difficult to do it comprehensively now."
Director Lee responded as follows when Rep. Kim Yong-man of the Democratic Party of Korea, a member of the National Assembly's Political Affairs Committee, asked about the government's progress in easing network separation regulations.
He explained, “It seems that there is a need to stick to the basics and continue to transition to an AI security system step by step,” adding, “Our basic step is to check that we proceed first by sticking to the basics while minimizing external exposure.”
Currently, domestic financial companies are subject to network separation regulations that require business systems to be separated and blocked from external communication networks for security reasons. However, the authorities are in the position that network separation regulations should be completely lifted for financial companies with response capabilities so that they can defend against rapidly evolving AI attacks with AI.
When asked whether network separation regulations can be relaxed, he said, "Not only budget but also a huge amount of time is invested in system reform, and it is said that there is a gap in that period. Because of that, it is not a situation in which network separation can be done at a rapid pace."
At the same time, he said, "(Regarding security control), we will urgently (supplement) the multi-factor authentication system, but fundamentally, we will discuss with the Financial Services Commission ways to improve security system vulnerabilities in the Electronic Financial Transaction Act or the Framework Act on Digital Assets."
Meanwhile, with the authorities planning to inspect financial companies' internal reporting systems in relation to the recent series of AI hacking breaches in the financial sector, they announced, "This will probably be the first issue in which the issue of CEO responsibility is addressed in relation to internal control standards management obligations and cybersecurity hacking incidents." It is interpreted that the intention is to hold the CEO of the financial company involved in this hacking incident accountable.
When it was pointed out that the reporting time to the bank president and others should be shortened when problems such as hacking arise, he responded, "I will take care of this in the process of preparing to strengthen the responsibilities of the Chief Information Security Officer (CISO) and the CEO."
Meanwhile, in response to a question from Rep. Park Hong-bae of the Democratic Party about the plan to improve the governance structure of financial companies that the authorities have been preparing since early this year, he said, "We conducted a thorough investigation of all financial holding companies from the end of last year to the beginning of this year and summarized the results," and added, "The government plan related to governance reform was created based on that."
He added, “The bill has now been drafted, and I understand that the party and government are discussing it.”
In response to Democratic Party lawmaker Lee Kang-il's point that the operation of the internal control system should be post-checked in the year-end appointment of bank presidents, he said, "Even before the law is revised, we will conduct a general inspection of the current appointment process in the banking sector and confirm the performance of whether improvements in governance are actually achieved."
Last month, KB Financial Group broke public expectations and recommended Lee Jae-geun, head of KB Financial [105560], as the next chairman instead of current Chairman Yang Jong-hee's reappointment. In response to Rep. Lee's question, "Can this be seen as an example of a system that verifies candidates based on various criteria working?", he indirectly expressed sympathy by saying, "I think there are a lot of people who see it that way."
