S. Korean banks lose 500 billion won since 2016 due to employee crimes

South Korean banks and their customers lost 488.4 billion won in the last five years due to financial crimes committed by employees, including embezzlement and fraud, according to data submitted by the Financial Supervisory Service.

Twenty local lenders suffered losses through 186 cases from 2016 to June this year.

The state-run Industrial Bank of Korea lost the most amount at 133.7 billion won in 15 cases. Korea Development Bank, another state-run entity, was at No. 2, losing 129.8 billion won in five incidents.

The number of crimes that happened in the four banks: Woori, KB Kookmin, Shinhan, and Hana, accounted for around 60 percent of the total with 109.

There were 33 financial crimes in Woori Bank, while both KB Kookmin and Shinhan had 27 cases each.

Hana dealt with 22 cases while NH Nonghyup had 19.

Embezzlement accounted for almost half of the cases, with 90, while fraud covered 30.6 percent with 57 occurrences.

However, fraud dealt the hardest blow to the banks and its customers as it was responsible for a loss of 403.4 billion won, representing 82.6 percent of the total.

There were 26 cases of breach of trust, accounting for 14 percent, while there were eight theft cases, covering 4.3 percent.

It was in 2016 when the most number of cases, with 48, transpired, costing the most amount lost per year at 351.3 billion won.

From January to June this year, 21 cases cost banks 3.1 billion won.

With technological advances, new loopholes continue to open opportunities for crimes.

In April, an employee of Woori Bank embezzled 185 million won for personal investment in cryptocurrency.

According to Rep. Lee Young of the People Power Party, most financial crimes emanate from the employees’ sense of moral hazard.

Rep. Lee noted that banks must establish sound employee management standards and introduce measures to curb recidivism through stricter punishments.