What does the FSC do???
2009/08/21 3 Comments
“Aren’t they the same thing?” you ask.
“No, they are not.”
The two words, “commission” and “supervisory” should give you a hint.
The FSC (commission) is a government entity where all the financial policies and regulations are formed. It is the main regulating body that is able to license financial institutions and have the ability to create and revise finance related laws.
To understand more clearly, you need to know the background of their establishment.
The following is an excerpt from the FSC; we’ve left out the extensive details and made it as simple as possible:
Korea‘s financial supervision structure underwent a major change on February 29, 2008, when the Financial Supervisory Commission was integrated with the Financial Policy Bureau of the former Ministry of Finance and Economy (Ministry of Strategy and Finance) to become the Financial Services Commission. The integration was envisioned as a more effective institutional arrangement that enables the government to perform its oversight with greater efficiency and consistency and at the same time better respond to the market.
As Korea‘s principal supervisory authority, the new FSC is given broad statutory mandate to carry out three key functions:
- Financial policy formulation
- Financial institution and market oversight
- Anti-money laundering
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.
In respect of anti-money laundering, the 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 financing efforts.
Under the reorganization, the Financial Supervisory Services (FSS) acts as the executive supervisor for the FSC and principally carries out examination of financial institutions along with enforcement and other oversight activities as directed or charged by the FSC. Unlike the FSC, the FSS is staffed by non-civil servants and headed by the Governor.
The FSC is led by 9 commissioners
- The Chairman is appointed by the President with the recommendation of the Prime Minister.
- The Vice Chairman is appointed by the President with the recommendation of the Chairman of the FSC and concurrently holds the position of the Chairman of the Securities Futures Commission (SFC) within the FSC.
- 2 standing commissioners are appointed with the recommendation of the Chairman of the FSC.
- Of the 5 non-standing commissioners
- Vice-Minister of the Ministry of Strategy and Finance
- Governor of the Financial Supervisory Service
- Deputy Governor of the Bank of Korea
- President of the Korea Deposit Insurance Corporation
- The remaining non-standing commissioner is appointed with the recommendation of the Chairman of the Korea Chamber of Commerce and Industry, who recommends an industry representative.
These 9 commissioners have the authority to deliberate and decide on all policy matters relating to the inspection and supervision of financial institutions and the securities and futures markets. 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.