South Korea’s monetary authorities are making ready to introduce extra extreme sanctions for accounting misconduct to get rid of gaps which have permitted senior executives to keep away from accountability, Korea Bizwire reported.
The Securities and Futures Fee has sanctioned a brand new regulatory framework that can considerably enhance penalties for each companies and their leaders.
The up to date laws will see fines for intentional and sustained accounting infractions rise by roughly 50% for firms and by as a lot as 150% for people.
The brand new guidelines may also set up grounds for holding former executives and different key decision-makers financially accountable, even when they’re not receiving salaries or dividends, the report mentioned.
Officers have famous that penalties for deliberate falsification similar to doc manipulation or concealment will now be handled equally to these for embezzlement or unfair buying and selling practices.
Moreover, the reforms will double the utmost fines for people concerned in company fraud, elevating it from 10% to twenty% of the corporate’s complete penalty.
Former executives will not be eligible for reductions based mostly on corrective actions taken after a scandal, the report added.
This initiative follows a notable enhance in fraudulent reporting, with regulators figuring out 490 accounting violations from 2018 by the primary half of 2025 (H1 2025), leading to fines totalling practically Won100bn ($72.1m).
The variety of intentional violations rose from eight in 2022 to 21 in 2024.
Monetary Providers Fee vice-chairman Kwon Dae-young was quoted by the information company as saying: “Accounting fraud that undermines market belief should be punished at a stage that strips away all financial incentives.”
The proposed measures may also improve oversight of South Korea’s three-tier audit system, which contains inner auditors, exterior auditors and authorities inspections.
Corporations that hinder audits will face penalties equal to these for intentional fraud, which can embody obligatory auditor appointments, suspensions of executives, or legal referrals.
In distinction, these with robust, impartial inner audit programs could also be granted leniency or exemptions within the occasion of violations.
Regulators are aiming to implement these measures in H1 of the upcoming 12 months, topic to needed legislative and regulatory adjustments.
“South Korea to implement stricter sanctions for accounting misconduct” was initially created and revealed by The Accountant, a GlobalData owned model.
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