South Korea's Financial Services Commission announced that the government has approved revisions to the enforcement decrees under the Financial Investment Services and Capital Markets Act and the Act on External Audit of Stock Companies. The changes remove the existing caps on whistleblower rewards for unfair trading and accounting fraud, broaden eligibility for reward payments, and tighten monetary penalties for repeated accounting fraud and for individuals who benefited from violations even without direct compensation from the company. Under the revised whistleblower regime, rewards will be calculated against illicit gains or monetary penalties at up to 30 percent, based on the whistleblower's contribution, instead of being capped at KRW3 billion for unfair trading and KRW1 billion for accounting fraud. Reports made to other authorities, including the National Police Agency and the Anti-Corruption and Civil Rights Commission, will also qualify. Partial rewards will become available for certain accomplices that did not coerce others or repeatedly offend within five years, and an advance payment of 10 percent up to KRW100 million can be made once a monetary penalty is decided, rather than only after collection. On accounting fraud, repeated violations will attract an additional 20 percent to 30 percent penalty for each year of violation, subject to a ceiling equal to the total penalties across all violation years. Penalties can also be imposed on responsible persons who gained through misappropriation, embezzlement, breach of trust, or compensation from an affiliated company, with a minimum penalty of KRW100 million where gains cannot be objectively assessed. The revisions are scheduled to take effect immediately after promulgation on May 26. The Financial Services Commission also said subordinate rules will be updated to align with the legislative changes.
South Korea Financial Services Commission2026-05-20
South Korea Financial Services Commission secures cabinet approval to abolish whistleblower reward caps and strengthen accounting fraud penalties
The South Korea Financial Services Commission announced government approval of revisions to enforcement decrees under the Financial Investment Services and Capital Markets Act and the Act on External Audit of Stock Companies, removing caps on whistleblower rewards and tightening penalties for accounting fraud. Rewards will be set at up to 30 percent of illicit gains or penalties and broadened to cover reports to other authorities and certain accomplices, while repeated accounting fraud will attract additional penalties and sanctions on individuals who benefited. The revisions take effect upon promulgation on May 26, with subordinate rules to be updated.