South Korea’s financial authorities are preparing to introduce more severe sanctions for accounting misconduct to eliminate gaps that have permitted senior executives to avoid accountability, Korea Bizwire reported.
The Securities and Futures Commission has sanctioned a new regulatory framework that will significantly increase penalties for both corporations and their leaders.
The updated regulations will see fines for intentional and sustained accounting infractions rise by approximately 50% for companies and by as much as 150% for individuals.
The new rules will also establish grounds for holding former executives and other key decision-makers financially accountable, even if they are no longer receiving salaries or dividends, the report said.
Officials have noted that penalties for deliberate falsification such as document manipulation or concealment will now be treated similarly to those for embezzlement or unfair trading practices.
Furthermore, the reforms will double the maximum fines for individuals involved in corporate fraud, raising it from 10% to 20% of the company’s total penalty.
Former executives will no longer be eligible for reductions based on corrective actions taken after a scandal, the report added.
This initiative follows a notable increase in fraudulent reporting, with regulators identifying 490 accounting violations from 2018 through the first half of 2025 (H1 2025), resulting in fines totalling nearly Won100bn ($72.1m).
The number of intentional violations rose from eight in 2022 to 21 in 2024.
Financial Services Commission vice-chairman Kwon Dae-young was quoted by the news agency as saying: “Accounting fraud that undermines market trust must be punished at a level that strips away all economic incentives.”
The proposed measures will also enhance oversight of South Korea’s three-tier audit system, which comprises internal auditors, external auditors and government inspections.
Companies that hinder audits will face penalties equivalent to those for intentional fraud, which may include mandatory auditor appointments, suspensions of executives, or criminal referrals.
In contrast, those with strong, independent internal audit systems may be granted leniency or exemptions in the event of violations.
Regulators are aiming to implement these measures in H1 of the upcoming year, subject to necessary legislative and regulatory changes.
“South Korea to enforce stricter sanctions for accounting misconduct” was originally created and published by The Accountant, a GlobalData owned brand.
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