The Financial Services Commission of Korea (FSC) announced the guidelines on fintech investment by financial companies. The guidelines expand the scope of fintech business in which financial companies are allowed to invest by adopting a negative list approach and take into account the recent trends in technology and regulatory environment. The guidelines are to be implemented from October 2019 on a temporary basis for two years, on the condition that relevant regulatory changes will be made in the meantime.
As per the guidelines, the scope of the fintech investment includes the following:
- Innovative technology businesses in the areas of artificial intelligence, Internet of things, data business, and ICT business
- Innovative financial service provider accepted into the FSC regulatory sandbox or designated fintech firms to operate business commissioned by financial firms
- Fintech businesses recognized by FSC for the innovative digital technology and contribution to the financial sector and consumers, as part of the Negative List Approach
To expedite regulatory approval process, the guidelines require financial regulators to reply within 30 days whether such investment is approved or not. Currently, ancillary business that financial firms are allowed to operate is limited to one directly related to their primary business. The guidelines make it clear for financial companies to operate fintech business as ancillary business once they are allowed to invest in such fintech business. If financial firms make loss in fintech investment, they will be granted mitigation or immunity from penalty, unless such loss was incurred intentionally or out of gross negligence.
Related Link: Press Release (PDF)
Effective Date: October 2019 (for 2 years)
Keywords: Asia Pacific, Korea, Banking, Insurance, Securities, Fintech, Guideline, Artificial Intelligence, Big Data, FSC
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