South Korea's financial authorities are considering strengthening regulations in such a way that will hold top officials accountable when bank employees repeatedly commit irregularities such as embezzlement and insider trading.

The Financial Services Commission, a financial watchdog, is reportedly pushing for a revision to the Act on Corporate Governance of Financial Companies that will define the specific responsibilities of senior bank officials regarding internal oversight, local media outlets have reported, citing financial sources.

The revision will be based on a proposal by a lawmaker rather than a government-initiated bill, as the former tends to be passed and implemented faster, a decision reflecting a heightened sense of crisis among financial regulators.

Under the current law, only internal oversight obligations are defined, while there are no binding roles or responsibilities for CEOs and high-ranking officials at financial firms in connection with internal control. If the legislation is completed, the CEO at a bank will be held accountable for repeated embezzlement cases and other irregularities.

The move comes after a host of high-profile embezzlement and insider trading incidents at banks have been revealed, shocking customers and sparking public criticism about financial authorities that failed to prevent such serious crimes.

At the same time, the financial authorities led by the FSC are set to beef up the process of monitoring banks by carrying out on-site checks at random without prior notice.

It remains to be seen whether the new steps by the financial authorities will be able to root out embezzlement and illegal acts by bank employees. But there is no question that the financial authorities must tighten rules and oversight for financial companies considering the scale and nature of recent scandals at banks.

Last week, South Korea's financial authorities said they exposed a disconcerting case in which KB Kookmin Bank employees exploited undisclosed information from clients to engage in a stock price manipulation scheme, reaping 12.7 billion won ($9.54 million) in illicit profits.

KB Kookmin Bank employees in charge of trading securities obtained detailed information on equity issuance for 61 listed companies in advance, and bought the stocks in question between January 2021 and April 2023 in their own names or in the borrowed names of family members. Some employees shared the information with colleagues, family members and relatives.

It is puzzling that both financial authorities and KB Kookmin Bank officials failed to spot such a grave crime that continued for over two years.

In another example of an internal supervision failure, DGB Daegu Bank employees were found to have opened around 1,000 accounts by forging customer account data. The Financial Supervisory Service said Thursday it is inspecting DGB Daegu Bank for opening securities accounts without the consent of customers.

Worse, DGB Daegu Bank failed to notify financial regulators about the forgery case promptly. It belatedly launched an internal investigation on July 12 even though it had been aware of the incident since June 30.

On Aug. 2, it came to light that an employee of BNK Kyongnam Bank had embezzled 56.2 billion won over 15 years dating back to 2007 by forging loan documents while handling real estate project financing. The FSS launched an on-site inspection at the bank, adding that the prosecution is investigating the employee over the massive embezzlement case.

According to an FSS report released by Rep. Kang Min-kuk of the ruling People Power Party, the total amount of misappropriated money at financial firms from 2017 through July this year reached 181.6 billion won, involving 202 bank employees. Worryingly, the total scale of the embezzlement cases shot up from 8.9 billion won in 2017 to 82.6 billion won in 2022.

Not only Korea's banks, but also Korea's financial authorities are responsible for the continued embezzlement cases. Regulators said they planned to tighten the internal supervision rules in April last year when Woori Bank suffered an embezzlement incident involving 70 billion won. Regrettably, that plan did not work.