IBK Industrial Bank of Korea faces scrutiny over 83 billion won fraud in China

IBK Industrial Bank of Korea is facing scrutiny over a massive financial fraud involving approximately 83.37 billion won at its Chinese subsidiary. The incident occurred between December 2023 and June 2024, involving an online loan platform that manipulated repayment accounts to embezzle funds.

While the bank provided loans directly to borrowers, the repayment process was managed by an external platform. The platform allegedly diverted principal and interest payments to unauthorized accounts and falsified digital records to show payments as completed. This resulted in borrowers being incorrectly flagged as delinquent, leading to credit score drops and debt collection efforts, while the bank failed to recover the funds.

Criticism has been directed at the bank's internal controls, as it failed to detect the discrepancy for six months despite claiming to perform daily reconciliations. Furthermore, five other Chinese financial institutions had already severed ties with the platform in early 2024, a warning sign the bank reportedly missed. The Financial Supervisory Service has also faced criticism for its delayed response, as it has yet to conduct on-site inspections or formal written investigations, opting instead to wait for the bank's final report.