Third-Person Certificates of Deposit Now Illegal

A client who asks for an issue of certificate of deposit (CD) and a payer are both prohibited from issuing CDs in a third person’s name from now on.

Starting next January, the transaction content of unsigned CDs worth more than 50 million won will be reported to the Financial Intelligence Unit (FIU) under the Ministry of Finance and Economy.

Kim Jung-hoe, deputy governor at the Financial Supervisory Service (FSS) said on August 25 that he would devise a plan on how to improve the issue and circulation of CDs based on the above and confer with the government and the Bank of Korea.

The FSS will promote the introduction of a registration system as a long-term task to enable transactions to proceed on computers after CDs are registered with the Korea Security Depositories when financial companies issue them.

Until the introduction is completed, a plan to carry out the current system of issuing unsigned CDs, and a registration system side by side is under review.

It is predicted that if the plan comes into operation, CD-related financial accidents may decline, but it is also predicted that the financial market might shrink because anonymity, a merit of CDs, is not guaranteed.

Kyung-Joon Chung news91@donga.com