Senior Deputy Governor Lee Se-hoon of the Financial Supervisory Service said he expects that intelligence-led investigative authority will be granted to the special judicial police for livelihood-related financial crimes now being pursued. Intelligence-led investigative authority means the power for the special judicial police to detect alleged crimes on their own and open an investigation. Lee said the agency is also considering retroactive nullification, which would render contracts void from the outset when needed, for financial products deemed to pose serious risks to consumers.
At a briefing on the 22nd regarding the FSS's organizational revamp, Lee said, "When special judicial police powers are typically granted, intelligence-led investigative authority automatically follows. Because the Financial Services Commission (FSC) Capital Markets Investigation Team has investigative authority, the FSS capital markets special judicial police have limited intelligence-led investigative authority, while the special judicial police for livelihood-related financial institutional sector face no such constraint."
The FSS is pushing to set up special judicial police for livelihood-related financial crimes to directly respond to voice phishing, insurance fraud and illegal private lending. Special judicial police is a system that grants administrative officials limited investigative authority to probe crimes in specialized fields.
The capital markets special judicial police the FSS currently operates do not have intelligence-led investigative authority, so they can investigate only under a prosecutor's direction. The higher law, the Criminal Procedure Act, does not restrict the special judicial police's intelligence-led investigative authority, but a subordinate regulation by the Financial Services Commission (FSC) blocks it. If the FSS special judicial police are granted intelligence-led investigative authority, their powers will expand. Some in the industry also see the FSC as checking the FSS's growing authority.
Lee said, "There is no disagreement with the Office for Government Policy Coordination (OPC) in terms of the need for an all-out response, given the severe harm caused by livelihood-related financial crimes," adding, "However, coordination with relevant agencies is necessary to determine the scope of the special judicial police's authority."
Lee also said the agency will consider suspending sales of financial products deemed to pose serious risks to consumers. The plan also contemplates retroactive nullification that would render contracts void from the outset when needed. "For harm caused by products already sold, measures such as voiding contracts may be necessary," Lee said. "However, a legal review is needed on how far we can restrict private contracts."