Financial Services CommissionBetter Financial Policy & Regulation

The Financial Services Commission (FSC) is a central government agency in charge of financial policy and regulatory supervision

03 Greetings from the Chairman04 Introducing FSC05 Vision & Mission06 Organization08 Financial policy agenda for 2015

Greetings from the Chairman

Korea’s financial sector has achieved a quantitative growth with a sophisticated financial system since the Asian financial crisis in 1997. However, we are now faced with unprecedented challenges such as low birth rate, aging population, and low interest rate.To navigate such challenges, the financial sector must reinvent itself to fulfill its role that better supports growth of the real economy and creates greater value on its own. Now is the right time to push forward financial regulatory reform.We cannot afford another chance.

The FSC will be committed to accomplishing our mission of financial regulatory reform. We will promote autonomy and competition in the financial sector, while channelling more funds to innovative businesses. We will find new growth drivers for the financial sector through financial regulatory reform, convergence with non-financial sectors, and pioneering into overseas markets.

The FSC will ensure financial market stability with household debt risk under control. No efforts will be spared to improve microfinane services and strengthen financial consumer protection. We will always listen carefully to the voices of financial market players, reflecting them into financial policies.

Yim Jong-yongChairman,Financial Services Commission

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Introducing FSCPromoting financial stability, consumer protection and advancement of Korea’s financial industry

orea’s financial supervisory structure underwent major changes following the Asian financial crisis in 1997. To ensure effective and efficient supervision of all financial sectors, the Financial Supervisory

Commission was established in April 2008 as an integrated supervisory agency with consolidating financial supervisory authorities across all financial sectors.

The Financial Supervisory Commission was reorganized into the current Financial Services Commission (FSC) on February 29, 2008 with the integration of the Financial Policy Bureau of the former Ministry of Finance and Economy. The FSC thus has the statutory authority to draft and amend financial laws and regulations and issue regulatory licenses to financial institutions.

In addition, the FSC oversees cross-border matters such as supervising foreign exchange transactions conducted by financial institutions to ensure their financial soundness. Korea Financial Intelligence Unit (KoFIU), which was also integrated into the FSC as part of the reorganization, leads the government’s anti-money laundering and counter-terrorism financial efforts.

K

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FORMULATING• �Develop�financial�policies�that�

support economic growth• �Promote�financial�market�

stability with macro & micro policy tools

• �Improve�the�efficiency�and�resilience of financial markets

PROTECTING• �Protect�the�rights�of�consumers�

in financial transactions• �Mediate�and�resolve�consumer�

complaints• �Provide�consumer�and�investor�

financial education programs

SUPERVISING• �Supervise�financial�institutions�

and oversee financial markets• �License�financial�service�

providers• �Investigate�unlawful�market�

conduct

ADVANCING• �Enhance�competitiveness�of�

the financial industry• �Promote�Korea�as�a�global�

financial center• �Support�domestic�financial�

institutions in globalizing business operations

MISSION

The FSC is responsible for formulating financial policies, supervising financial institutions and financial markets, protecting consumers, and advancing Korea’s financial industry.

VISION

Fostering the growth of the financial sector that drives the development of the real economyThe FSC contributes to the development and growth of the economy by advancing the financial industry, preserving financial market stability, enforcing fair market practices, and protecting consumers.

Formulation of Financial Policies

Development of Financial Industry

Consumer Protection

Financial Institutions & Markets Supervision

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Financial Services CommissionThe FSC consists of nine commissioners: Chairman, Vice Chairman and seven Commissioners including four ex-officio positions held by the Vice Minister of the Ministry of Strategy and Finance, the Governor of the Financial Supervisory Service, the�Deputy�Governor�of�the�Bank�of�Korea,�and�the�President�of�the�Korea�Deposit�Insurance Corporation. The FSC deliberates and decides on financial policy matters relating to the inspection and supervision of financial institutions and the securities and futures markets. Matters relating to the securities and futures markets are largely delegated to the SFC. The FSC also has the authority to issue and revoke licenses from�financial�institutions.�Legislation�relating�to�the�financial�sector�is�drafted�and�submitted to the National Assembly by the FSC.

Securities and Futures CommissionThe SFC is a sub-commission within the FSC responsible for the oversight of the securities and futures markets. It consists of five members including the Chairman of the SFC. The Vice Chairman of the FSC concurrently holds the chairmanship of the SFC. The principal role of the FSC is to investigate market abuses in the securities and futures markets and establish accounting standards and audit reviews. It also conducts advance review of matters relating to the securities and futures markets to be deliberated by the FSC.

Financial Intelligence Unit The FIU is the FSC-affiliated authority responsible for the prevention of money laundering and terrorist financing with financial institutions. Korea will assume the presidency of the Financial Action Task Force (FATF) starting from July 2015, an inter-governmental body established in 1989 to set international standards for combating money laundering, terrorist financing and other related threats to the international financial system.

ORGANIZATION

The FSC is a government agency with the statutory authority over financial policy and regulatory supervision. The FSC’s functional responsibilities are shared among the Securities and Futures Commission (SFC) and subordinate bureaus.

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Spokesperson’s Office

Capital Market Investigation Unit

International Cooporation Office

Financial & Corporate Restructuring Policy Bureau

General�Administration�Division

Planning & Coordination Bureau- Creative Planning & Finance Office- Regulatory Reform & Legal Affairs Office- Audit & inspection Office

Banking & Insurance Bureau- Bank Division- Insurance Division- Electronic Finance Division

Consumer Finance & Protection Bureau- Non-Bank Division- Microfinance Division- Financial Consumer Division

Capital Markets Bureau - Capital Markets Division- Asset Management Division- Market Investigation Division

Financial Policy Bureau- Financial Policy Division- Financial Market Analysis Division- Industrial Finance Division- International Finance Division- Financial Restructuring Division

Securities and Futures Commission

Financial Intelligence Unit (KoFIU)

Financial Consumer Protection Bureau

Financial Services Commission

ORGANIZATIONAL CHART

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The FSC pushes forward a financial reform initiative as rapidly changing financial environment calls for innovation and competitiveness in the financial sector. Our reform drive will go forward with suggestions and feedback from financial market participants to bring real, practical changes to the marketplace.

TOWARD BETTER REGULATIONCutting red tape for financial institutions, while strengthening market fairness and consumer protection

•� �Improve�financial�supervisory�examination�&�enforcement�practices�to�reduce�regulatory burden for financial institutions

•� �Shift�from�‘positive’�to�‘negative’�lists�of�financial�regulations�to�broaden�the�scope of businesses that financial firms are allowed to provide

•� �Make�regulatory�system�streamlined�and�transparent�to�remove�regulatory�complexity and uncertainty for foreign financial companies

Financial policy agenda for 2015

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FOSTER FINTECHFacilitating the IT-finance convergence to provide innovative and convenient financial services

The�FSC�is�committed�to�supporting�the�Fintech�sector�with�a�‘step-by-step’�strategy�to�better�accommodate�online�&�mobile�innovation into financial services, which will open new growth opportunities for financial companies and benefit financial consumers as well.

STEP 1•��Ease regulatory requirements

on establishment and registration of Fintech startups

•��Stimulate financial institutions’ investments in the Fintech sector

STEP 2•��Launched�Fintech�Center�to�

provide Fintech businesses with one-stop service such as connecting with mentors & investors, and offering administrative, legal advisory service

•��Provide�policy�loans�and�guarantee to support Fintech startups

STEP 3•��Shift�regulatory�focus�from� ‘ex-ante’�to�‘ex-post’�regulation�to encourage the development of new, innovative online & mobile financial services

STEP 4•��Enable�financial�consumers�

to enjoy online & mobile innovation in the areas of diverse financial services such as payments, banking, crowd funding, wealth management, insurance, etc.

Lower barriers to entry

for Fintech businesses

Foster ‘Fintech ecosystem’

Reshape regulatory

system

Facilitate diverse Fintech

services

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Growth Divestm

ent

Star

tup Reinvestment

PROMOTE ‘TECH FINANCE’Financing tech start-ups & SMEs based on credit evaluation of technology

•� �Builds�up�banks’�capacity�in�credit�evaluation�of�technology�and�risk�management�

•� �Improve�efficiency�and�credibility�of�tech�evaluation�system�

•� �Stimulate�venture�capital�investment�in�early-stage�tech�firms�and�facilitate�direct�financing of tech SMEs through capital markets

VITALIZE CAPITAL MARKETSCreating a virtuous cycle of capital markets to boost venture capital investment and facilitate investors’ recoupment

Venture Capital Investment•� �Devise�regulatory�&�tax�

incentives to boost venture investment

•� �Revise�regulations� on private equity funds

•� �Boost�investments� into innovative startups through the�Growth�Ladder�Fund

Investment Recoupment•� �Vitalize�KONEX�with�eased�

requirements for individual investors

•� �Faciltate�M&As�among�SMEs

•� �Reorganize�the�bourse�structure� to promote competition between�KOSPI�&�KOSDAQ

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Asia’s Financial HubThe FSC continues to pursue its initiative to make Korea as a financial hub that attracts foreign investment. Seoul and Busan are now top financial centers in Asia/Pacific region by the Global Financial Centers Index (GFCI) in March 2014

Knowledge SharingThe FSC working closely with affiliated agencies and financial institutions to share financial expertise and know-how including financial infrastructure with emerging economies

Global CompetitivenessThe FSC supports financial institutions to expand business overseas by improving regulations and actively communicating with the industry

International Cooperation As of May 2015, the FSC signed 48 MOUs with foreign financial authorities and international organizations for closer cooperation in financial policy and supervision

UK: FSA, FCA, PRA, BOE Japan: FSA Germany: BaFin China: CSRC, CIRC, CBRC France: AMF, CB Vietnam: SSC, SBV, MOF Malaysia: SC UAE:�DFSA,�SCA, IA US:�SEC,�FRB,�FDIC,�OCC,�OTS,�NAIC���Hong Kong: HKMA Hungary: HFSA, NIO Qatar:�QFCRA���Singapore: MAS Cambodia: MOEF, NBC Russia: FFMS Australia: APRA, ASIC New Zealand: RBNZ Brazil: BCB Mongolia: BOM, FRC Turkey: BRSA, CMB, UT Indonesia: BI, FSA Thailand: OIC, TSEC Uzbekistan: MOF, CBU Kazakhstan:�NBK,�MEDT���Moldova: NBM India: RBI *International Organization of Securities Commission (IOSCO) *European Securities and Markets Authority (ESMA)

GLOBAL LEADERSHIP

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124 Sejong-daero, Jung-gu, Seoul 100-745, Republic of KoreaTel. +822-2145-9582-5 E-mail. fsc_media@korea.krHomepage. www.fsc.go.kr/eng

Promoting financial stability, consumer protection and advancement of Korea’s financial industry