One of main financial IT and FinTech-related tasks for Financial Supervisory Service (FSC) in 2019 is to prepare blockchain supervisory frames. As various blockchain-based financial services are expected to make their appearances within capital market as financial regulatory sandbox is enforced, FSS wants to establish supervisory frames to prepare for any incident that can occur.
“We are going to expand of Regtech that helps FinTech companies to follow regulations, legalize P2P (Peer to Peer) loans, and induce vitalization of blockchain technology within financial industry.” said Principal Director Yoo Kwang-yeol of FSS at a briefing session that was held on the 4th.
Along with enforcement of financial regulatory sandbox on the 1st, 3 services out of 19 services that were selected as candidates for preferential evaluation are based on blockchain technology. These services cover wide range of fields such as beneficiary certificates for real estate and management of a list of shareholders of a private company.
“We are going to create a friendly environment for blockchain technology by looking into successful cases of application of blockchain technology in financial industries and understanding problems that can prevent application of blockchain technology.” said Director Jeon Gil-soo of FSS’ IT and FinTech Strategy Bureau. “We are going to look into blockchain supervisory frame by working with global consortiums.”
FSS also decided to prepare general supervisory system for FinTech industry as risks from FinTech industry can easily spread towards traditional financial industries as investors are taking more risks due to recent low interest rate. Also, it has been difficult to identify unfair transactions that occur at a border between financial industry and non-financial industry as regulatory system on FinTech industry has not been established clearly.
FSS also decided to prepare risk supervisory measures towards financial services based on new technologies within current financial IT field and it is also going to tighten up security risk supervision on conversion of web standards.
It is also going to prepare risk supervisory system related to outsourcing of IT by financial companies. “We are going to carry out inspection and instruction on appropriateness of internal control of IT related to outsourcing of IT.” said Director Jeon. “We are also going to prepare joint inspection system to support autonomous risk management system of outsourcing of IT.”
Risks that come from financial Cloud systems are also main targets for supervision in 2019. Since there has been rapid increase in number of financial services based on new technologies, FSS believes that there will also be increased number of outside attacks.
Financial Security Institute chose stoppage of CSP (Cloud Service Platform) services, occurrence of security incidents, greater dependence on major CSPs, negligent management, business consignment by a foreign company, and insufficient grounds for management supervision as main risks related to using Cloud.
For example, although incidents involving Cloud servers require inspections by financial authorities, Cloud service providers can reject on-site investigations by saying that authorities do not have supervision rights.
“We are going to look for ways to manage risks by analyzing IT risks that come from services based on new technologies and inspect appropriateness of risk management towards increased use of outsourcing of IT and Cloud services.” said a representative for FSS.
Inspection on financial IT businesses will be centered on large-scale IT businesses. It has also decided to tighten up regular monitoring activities on financial companies that have lower IT risk scores than average scores or have their scores dropped.
Staff Reporter Ryu, Geunil | ryuryu@etnews.com