South Korea's financial regulator chief says AI hacking response lacking even on basics
In short
Financial Services Commission chairman Lee Eog-weon (이억원) told a parliamentary audit in Seoul on October 8 that the response to recent AI-related hacking incidents in the financial sector was "very lacking even in very basic parts" and would be thoroughly checked and changed. He said AI attacks can only be stopped with AI and that the commission is examining step-by-step ways to change the network separation regulation, which it is pushing to lift on the premise of security.
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Lee Eog-weon (이억원), chairman of South Korea's Financial Services Commission, said on October 8 that the response to recent AI-related hacking incidents in the financial sector was "very lacking even in very basic parts." He made the remarks at the National Assembly National Policy Committee's audit of the commission at the National Assembly in Yeouido, Seoul, answering a question from Social Democratic Party lawmaker Han Chang-min (한창민). "These are things we need to check more thoroughly and change," Lee said, according to Yonhap and Chosun Ilbo. [ 1 , 2 , 3 , 4 ]
Lee said that blocking AI attacks ultimately requires using AI, and that the commission is examining step-by-step and effective ways to change the network separation regulation, which separates financial firms' internal networks from the external internet. In his opening remarks he said the commission is pushing to lift the regulation on the premise of security, to support innovation and security capabilities in the financial sector. [ 1 , 2 , 3 , 4 , 5 , 6 ]
Democratic Party lawmaker Park Min-kyu (박민규) also raised the issue. Newsis reported he said hackers' weapons are advancing daily while banks cannot use AI to strengthen their defences because of the network separation rule; Korea Economic Daily reported he said few financial firms had taken part in the easing of the rule. Lee told him he agreed. [ 1 , 5 ]
Chosun Ilbo reported that customer data leak incidents have occurred recently at Shinhan, KB Kookmin and Hana Bank, among others. Electronic Times reported that Han cited a guideline on frontier AI security threats that regulators released in July, which warned that AI could quickly find security weaknesses at financial firms and recommended checks of IT assets, supply chains, external systems and application programming interfaces. The Financial Security Institute held a seminar for 160 financial-company security officers on the 17th of last month urging checks of exposed assets, the outlet said. Han questioned whether firms had followed the recommendations and whether supervision had been sufficient. [ 3 , 4 ]
At the same audit, People Power Party lawmaker Shin Dong-uk (신동욱) said Seoul apartment prices kept rising despite strict lending curbs. Lee said prices would likely have risen more without them and that the cap limiting mortgage loans to 600 million won was widely assessed as effective, since high-priced homes in Gangnam were driving prices at the time. Responding to Shin's reference to President Lee Jae-myung's 'flattening' remark, he said the commission is focusing on supply and would expand it quickly to stabilise the market. [ 2 , 4 , 6 ]
Why it matters
The head of the financial regulator acknowledged weaknesses in the sector's security response after a series of incidents that Chosun Ilbo linked to customer data leaks at Shinhan, KB Kookmin and Hana Bank. Electronic Times reported the incidents have raised questions about whether supervision was effective, while the regulator still plans to ease network separation rules so financial firms can use AI.
Key facts
- Lee Eog-weon spoke on October 8 at the National Assembly National Policy Committee's audit of the Financial Services Commission. [ 1 , 2 , 3 , 4 , 5 , 6 ]
- Lee said the response to AI hacking was "very lacking even in very basic parts" and should be thoroughly checked and changed. [ 2 , 3 , 4 , 5 , 6 ]
- Lee said blocking AI attacks ultimately requires using AI. [ 1 , 2 , 4 , 5 , 6 ]
- Lee said the commission is examining step-by-step and effective ways to change the network separation regulation. [ 1 , 2 , 4 , 5 , 6 ]
- In his opening remarks Lee said the commission is pushing to lift the network separation regulation on the premise of security, to support innovation and security capabilities in the financial sector. [ 3 , 5 ]
- Chosun Ilbo reported recent customer data leak incidents at Shinhan, KB Kookmin and Hana Bank, among others. [ 4 ]
- Lee said the cap limiting mortgage loans to 600 million won had an effect, and that the commission is focusing on expanding housing supply. [ 2 , 4 , 6 ]
Confirmed by several sources
- Lee said the financial sector's response to AI hacking was very lacking even in basic parts, answering a question from Social Democratic Party lawmaker Han Chang-min (한창민). [ 2 , 3 , 4 ]
- Lee said AI attacks can only be stopped by using AI. [ 1 , 2 , 4 , 5 , 6 ]
- The commission is looking at how to change the network separation regulation. [ 1 , 2 , 4 , 5 , 6 ]
- Lee said the commission is pushing to lift network separation rules on the premise of security. [ 3 , 5 ]
- Lee said housing prices would likely have risen more without the lending curbs, and that the 600 million won mortgage cap was widely assessed as effective. [ 2 , 4 , 6 ]
Still unclear
- What exactly lawmaker Park Min-kyu (박민규) raised about network separation. Newsis reports he said banks cannot use AI for defence because of the network separation rule, while Korea Economic Daily reports he said few financial firms had joined the easing of the rule.
- Which institutions were hit and what was compromised in the recent AI-related hacking incidents. Only Chosun Ilbo names Shinhan, KB Kookmin and Hana Bank and refers to customer data leaks; Yonhap describes them as AI agent hacking incidents without details.
- When and in what form the network separation rules will be changed. Lee described only step-by-step methods under review; no timetable is given.
What local media are saying
Timeline, local time
- Newsis reports Lee's remarks that AI hacking must be blocked with AI and that network separation rules are under review. [ 1 ]
- Yonhap reports Lee's statement that the basic response to hacking was lacking, made at the morning session of the audit. [ 2 ]
- Electronic Times reports on questions over the effectiveness of supervision despite earlier warnings. [ 3 ]
- Chosun Ilbo and Korea Economic Daily publish reports on Lee's remarks. [ 4 , 5 ]
- Asia Economy reports Lee's remarks on the mortgage cap and the hacking response. [ 6 ]