Korea’s financial regulators will require domestic banks to apply tougher rules and procedures for customers opening a bank account in an effort to prevent them from establishing accounts under borrowed names used by third parties for slush funds and other financial irregularities.

Consumers will no longer be able to open an account within five minutes at banks from next month as the Financial Supervisory Service will require banks to go through rigorous identification screening and verification, the regulator said Monday.

Banks had allowed Korean consumers to open accounts with minimal identification and documents such as a resident registration card or copy of a resident registration form.

The financial regulator wants local banks to benchmark overseas banks such as those in Hong Kong where it takes about two days to open an account after strict identification and credit evaluation.

A longer process may be slightly more inconvenient for consumers, but the FSS said it remained adamant about “completely eradicating” dummy accounts, which violate the Real Name Financial Transaction Law.

Although the number of dummy accounts has declined over the years, the problem still remains in the market.

Institutions such as the Korean Federation of Community Credit Cooperatives and the Korea Post that do not fall under the regulatory jurisdiction of the FSS have been found to have dummy accounts, the regulator noted.

More than 60 percent of 278 cases involving financial irregularities since last year including stock price manipulation were found to have been related to the violation of the real name law.

By Park Hyong-ki (hkp@heraldcorp.com)