South Korea’s financial regulators are moving to tighten digital defenses across the banking and financial sector following a surge in cyberattacks that compromised dozens of institutions and resulted in millions of dollars in losses.

According to the Financial Services Commission (FSC), 40 cyber security breaches were reported across 37 financial companies between late September and early December. The attacks affected a wide range of institutions, including major commercial banks, securities firms, savings banks, electronic financial service providers, and cryptocurrency exchanges.

The security breaches led to the exposure of roughly 473,000 customer records—including names, resident registration numbers, and bank account details. In addition, malicious actors successfully stole approximately 1 billion KRW (about $720,000 USD) from several mid-sized electronic payment and crypto platforms.

Widespread Audits and Strict CEO Accountability

In response to the growing threat, the South Korean government announced a comprehensive security inspection of approximately 580 financial entities nationwide.

The audits will target historical "blind spots" within financial IT networks. Regulators will examine not only primary consumer touchpoints like official websites and mobile apps, but also secondary vulnerabilities such as internal management platforms, staging environments, and third-party API (Application Programming Interface) connections.

Furthermore, regulatory oversight is stepping up:

Increased Audits: Major financial institutions (with assets exceeding 2 trillion KRW and 300+ employees) must now undergo security vulnerability assessments twice a year, a requirement that will extend to smaller institutions by 2028.
Executive Liability: Regulators emphasized that cybersecurity is no longer just an IT department issue, warning that top executives (CEOs) will face direct accountability if negligence leads to systemic security failures.

Dismantling Legacy Network Separation for AI-Driven Security

To address advanced threats—including AI-powered cyberattacks—the FSC plans to phase out South Korea's rigid network separation rules.

Implemented in 2013, network separation strictly isolated internal corporate networks from external internet access to block external intrusions. However, regulators noted that this system has hindered financial institutions from effectively adopting modern, cloud-based AI cybersecurity tools.

A dedicated task force launching this month will formulate a phased overhaul plan by the first quarter of next year. Instead of a blanket blockade, qualifying institutions meeting stringent security criteria will be allowed to integrate AI-driven threat detection systems to monitor anomalies in real time.

Additionally, financial authorities are establishing a broader threat-intelligence sharing network. Starting with a pilot in December, large financial firms will pool data on malicious IP addresses, zero-day attack vectors, and malware samples to protect the broader financial ecosystem.

Combating Secondary Crimes and Voice Phishing

To prevent stolen data from fueling secondary financial crimes like voice phishing, the Financial Security Institute will launch round-the-clock monitoring of dark web forums and encrypted messaging channels where leaked data is traded. Regulators are also pushing to legislate a "no-fault liability" scheme, compelling financial institutions to cover a portion of customer voice phishing losses even if the institution itself is not directly negligent.

Finally, the sector is rolling out AI-powered fraud detection. A new "Phishing Index" goes live this month to evaluate suspicious transactions in real time, scoring the probability of voice phishing involvement from 0 to 100 to help institutions intercept fraudulent transfers before funds are lost.

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