Financial authorities are establishing a rapid response system to swiftly freeze accounts suspected of involvement in various types of new fraud, including voice phishing, no-show scams, romance scams, and investment fraud. This initiative aims to address gaps in the existing legal framework that have led financial institutions to hesitate in freezing accounts that do not clearly fall under the category of voice phishing.
On May 28, the Financial Services Commission (FSC) held the first meeting of the "Voice Phishing Eradication Council". This council formalizes the previously irregular channels for addressing voice phishing within the financial sector. During the meeting, participants discussed a system for freezing transactions on suspicious accounts related to new types of phishing, methods for detecting ghost accounts, and preventive measures within the financial sector.
The focus is on the "proactive blocking" of suspicious accounts linked to new types of phishing. The FSC plans to implement guidelines for a "transaction freeze system for suspicious accounts related to new phishing" starting in late June. Under these guidelines, financial institutions will be able to temporarily freeze accounts for up to 72 hours if there is suspicion of telecommunications fraud, regardless of the type of crime, based on their own financial transaction detection systems, victim reports, or police notifications.
Previously, scams such as no-show fraud, romance scams, and investment fraud often disguised themselves as legitimate transactions, making it unclear whether they fell under the telecommunications fraud compensation law. While financial institutions could track the flow of funds between accounts, they faced challenges in determining the nature of the transactions or whether fraud had occurred, limiting their ability to act decisively.
In the future, financial institutions will first temporarily freeze suspicious accounts, after which the National Police Agency's integrated response team for telecommunications financial fraud will assess whether the case involves voice phishing or new types of phishing within 72 hours and notify the financial institutions. If deemed voice phishing, the payment suspension and victim relief procedures will follow the telecommunications fraud compensation law. If classified as new phishing, a temporary transaction freeze will be imposed for seven days, followed by a review by the Financial Intelligence Unit, which could extend the freeze for up to 60 days.
Efforts to strengthen detection systems targeting ghost accounts and new phishing will also be enhanced. The FSC, the Financial Supervisory Service, and the Financial Security Institute have drafted joint detection rules for six types of new phishing and nine types of ghost accounts. After simulations in June and July across different sectors, the final joint rules are expected to be confirmed in the third quarter, starting with the banking sector. This will later expand to areas such as virtual accounts and savings accounts, where detection has been lacking.
* This article has been translated by AI.
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