Korea Exchange Bank cautioned for sloppy branch management

Lax management of Tokyo, Los Angeles and Sydney branches can result to sanction by regulator.

The Financial Supervisory Service has given Korea Exchange Bank a warning for lax oversight of its overseas branches.

A source within the FSS said the deliberating committee of the nation's financial watchdog decided to impose sanctions on KEB's branches in other countries - including ones in Tokyo, Los Angeles and Sydney - over numerous "incidents."

The KEB branch in Osaka, Japan, for instance, violated anti-money laundering laws in 2007 by issuing a certificate for an account balance without even tracing the source of the funds, the official said. In Los Angeles, a KEB branch in 2008 loaned an excessive amount of foreign currency that exceeded internal limits set by the bank. The branch incurred huge losses as a result. The source also said there was an incident of embezzlement at the KEB branch in Sydney.

View the full story in JoongAng Daily.