FSS issues NH NongHyup Bank ‘severe’ institutional warning over alleged false documents, inspection obstruction

[Financial News] NH NongHyup Bank has received an “institutional warning” from the Financial Supervisory Service (FSS) for allegedly submitting false documents and systematically obstructing an inspection. Institutional warnings are classified as severe disciplinary measures among FSS sanctions.
According to the FSS on the 3rd, its Anti-Money Laundering Office notified NongHyup Bank on the 26th of last month of an institutional warning over, among other things, document manipulation. It also notified the bank of pay cuts for six unregistered executives and employees, reprimands for seven, cautions for two, and two items requiring voluntary remediation.
The FSS said NongHyup Bank falsely submitted customer verification records during the FSS’s ad hoc inspection of its overall anti-money laundering operations (AML inspection) last year, and arbitrarily omitted third-party customer verification details requested by the inspection team. From April 8 to May 9 last year, a total of 22 employees from four teams at NongHyup Bank accessed the AML system and systematically manipulated or changed 27,808 customer verification records without confirmation from customers or branch employees, then submitted them to the FSS as inspection materials. The FSS also said the bank systematically obstructed its inspection work, including by restricting access to the AML system so that the false submissions and omissions could not be verified. The FSS added that during its regular inspection in 2024, NongHyup Bank had also manipulated data entered into its computer systems and falsely submitted customer verification records.
During the period covered by the inspection, NongHyup Bank also violated its customer verification obligations when opening new accounts through branches, non-face-to-face channels, or third parties, and when conducting one-off financial transactions. It changed additional information about customers at high risk of money laundering without verifying it, and did not step up customer verification when they later conducted financial transactions again. In addition, the bank failed to report to the head of the Korea Financial Intelligence Unit 30 large cash transactions of 10 million won or more made between January 2023 and March 2025.
The FSS also notified NongHyup Bank of nine institutional improvement measures. Sanctions against financial institutions include cancellation of registration or authorization, business suspension, corrective orders, institutional warnings, and institutional cautions; institutional warnings and more severe sanctions are classified as serious disciplinary measures.
[email protected] Jo Eun-hyo Reporter