FSC creates FIU unit to swiftly freeze new phishing accounts in South Korea

A "payment suspension division" (tentative name) dedicated to halting transactions of accounts suspected of new types of phishing crimes will be created at the Financial Intelligence Unit (FIU) under the Financial Services Commission. Once revisions to the Financial Services Commission's organizational rules are completed at the end of this year, the division will begin work year.

According to the Financial Services Commission on the 6th, the FIU has completed consultations on organization and staffing with the Ministry of the Interior and Safety to establish the payment suspension division. When a government ministry creates a new division or increases personnel, it must undergo organization and staffing consultations with the Ministry of the Interior and Safety. The ministry is also said to have acknowledged the need for a dedicated unit to respond to new phishing schemes. The payment suspension division is expected to be formed with a staff of a little over 10.

Once the payment suspension division is created, it will take over review work for accounts suspected of new types of phishing that the FIU has handled since the end of June. The Financial Services Commission and the FIU have been implementing the "plan to suspend transactions of accounts suspected of new phishing crimes" in the second half of this year. The existing Special Act on the Prevention of Loss Caused by Telecommunications-Based Financial Fraud and Refund for Loss does not include scams "disguised as transactions for goods or services" under voice phishing, so accounts used in new phishing such as no‑show scams could not be proactively suspended by financial companies.

Until now, existing staff handled this review work without a dedicated department. When a victim reports, a financial company temporarily suspends the suspected account, and if police determine it is new phishing, they block deposits and withdrawals and report it to the FIU. Within seven business days, the FIU reviews the transaction details between the victim and the account holder and replies to the financial company on whether to maintain the suspension. If the FIU recommends maintaining it, the financial company can continue the suspension for up to 60 business days.

Currently, each case has a seven‑business‑day processing deadline, so the more reports there are, the harder it is to respond with existing staff—one reason cited for creating a dedicated division. The payment suspension division is expected to use financial transaction information held by the FIU, such as suspicious transaction reports (STRs), to review whether an account is linked to crime, and also serve as a point with financial companies and police.

The role of the payment suspension division is expected to grow. The FIU has prepared an amendment to the Act on Reporting and Using Specified Financial Transaction Information (Special Act) that would allow the FIU to directly suspend accounts suspected of being related to livelihood‑harm crimes such as drugs, gambling, illegal private lending, and large‑scale fraud, and it has been introduced in the National Assembly.

Currently, the FIU can only recommend to financial companies whether to maintain the suspension of accounts suspected of new phishing. If the law is revised, the payment suspension division will also take on the task of directly suspending suspected accounts.