Financial Crime World

International Cooperation Key in Combating Financial Crime in Korea

Combating Financial Crime in South Korea: Areas for Improvement

A recent review by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) has highlighted areas where South Korea can improve its efforts to combat financial crime. The assessment, adopted at the FATF’s February 2020 Plenary meeting, commends South Korea’s sound legal framework for tackling money laundering and terrorist financing but notes that more needs to be done to prevent government officials from laundering corruption proceeds.

Key Findings

  • South Korea has a robust understanding of the risks it faces from tax crimes, illegal gambling, fraud, and corruption.
  • The country is proactive in preventing the spread of weapons of mass destruction and aware of the proliferation financing risks it faces.
  • However, gaps in its ability to freeze assets under the United Nations sanctions regime need to be addressed.

Recommendations for Improvement

  1. Expand Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Measures: The report recommends extending AML/CFT measures to include the prosecution of laundering proceeds from all tax crimes.
  2. Strengthen International Cooperation Tools: South Korea can make more use of international cooperation tools to combat asset flight and offshore tax crime cases.
  3. Beneficial Ownership Information: Beneficial ownership information should be sought and provided in these cases.
  4. Address Tax Crimes, Non-Financial Businesses, and Professions: The country needs to strengthen its AML/CFT framework to address tax crimes, non-financial businesses, and professions.

Effective Cooperation and Collaboration

South Korean authorities are commended for their effective cooperation and collaboration through policy and operational structures that bring together a broad range of government agencies and the private sector. The country is also effectively cooperating with foreign counterparts, including through streamlined mutual legal assistance mechanisms.

Key Strengths

  • Effective use of financial intelligence to investigate crimes and terrorists
  • Asset recovery is a government priority
  • Good understanding of money laundering and terrorist financing risks among Korean financial institutions and casinos