Financial Crime World

Title: KoFIU: Korea’s Central Hub in the War Against Money Laundering

Introduction

KoFIU (Korea Financial Intelligence Unit) is a crucial player in the global fight against money laundering. Established under the Financial Transaction Reports Act (FTRA) in 2001, KoFIU connects financial institutions and law enforcement agencies as a central hub for detecting and preventing domestic and international illicit money laundering.

Understanding Money Laundering

  • Money laundering is a criminal procedure to disguise the origin of illicit funds.
  • According to Korean law (FTRA Article 2(5)), money laundering includes concealing or disguising criminal proceeds’ acquisition, disposal, or origin or evading taxes.
  • Financal institutions report suspicious transactions (STRs) to KoFIU when detected.

The Role of KoFIU

  • Receives and analyzes STRs from financial institutions.
  • Connects reports with law enforcement agencies.
  • Enforces Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime.
  • Implements legislations - Financial Transaction Reports Act, Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics, Act on Regulation and Punishment of Criminal Proceeds Concealment, Act on Prohibition against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction.
  • FTRA is the legal ground for foreign exchange of information based on reciprocity.
  • As of December 22nd, 2008, financial institutions must report suspicious transactions to KoFIU.
  • The Proceeds of Crime Act (POCA) criminalizes money laundering and its related offenses with penalties including imprisonment and confiscation of criminal proceeds.

KoFIU’s Tools and Resources

  • FIU Information System (since November 2002) to identify money laundering activities across borders.
  • Provides on-going training to financial institutions to prevent money laundering.
  • Participates in international community projects to combat money laundering effectively.

Collaboration with Law Enforcement and Partners

  • Law enforcement agencies use KoFIU’s information to apply sanctions on criminals and money laundering offenders under the AML/CFT regime.
  • Relevant administrative agencies, a centralized credit registry, and a centralized foreign exchange registry support KoFIU’s efforts.

Conclusion

KoFIU plays a significant role in upholding the country’s financial system and protecting it against money laundering threats through effective collaboration with various stakeholders and leveraging the power of technology and information sharing.