The Financial Services Commission announced that the government has approved amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act to introduce new non-monetary sanctions targeting unfair trading and illegal short sale activities. The revised Enforcement Decree is scheduled to take effect on April 23, 2025 alongside the revised Act and subordinate regulations. The package authorizes the FSC to restrict rule-breakers from trading financial investment products for up to five years, with the Enforcement Decree setting more granular restriction periods based on factors such as price impact, short sale order volumes, and unfairly gained profits, and allowing exemptions including certain pre-held assets unrelated to misconduct, externally triggered acquisitions such as inheritance or stock dividends, and debt securities considered unlikely to be used for unfair trading. If a restricted person acquires a product in breach of the order, the FSC can require disposal within a period of up to six months and impose a compliance fine for non-compliance. The FSC can also restrict rule-breakers from being appointed or serving as executives at listed companies for up to five years, with the Enforcement Decree extending covered entities to include financial companies such as banks, insurance companies, savings banks, and specialized credit finance businesses, and enabling the FSC to demand dismissal where a restricted person is appointed or not removed, with related information to be included in periodic disclosures. For suspected accounts, the FSC can require financial companies to fully or partially freeze payments for up to one year, and the Enforcement Decree sets additional grounds for lifting the freeze including existing seizure or injunction orders, withdrawal of the freeze request by an investigative authority, and transfers of non-seizable assets; affected parties can apply for termination within 60 days of becoming aware of the freeze, and the FSC must notify the outcome within 60 days, extendable by 30 days. Financial companies face administrative fines of KRW 100 million for non-compliance with a freeze demand and KRW 18 million for failing to notify the account holder and the FSC after freezing. The FSC indicated it will coordinate with relevant authorities and businesses to prevent concealment of illicit gains and will continue reviewing improvements to decision-making and implementation processes for payment freezes and restriction orders.

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