Financial Crime World

KoFIU’s Crusade Against Money Laundering in Democratic People’s Republic of Korea: AML Framework in Action

In the complex world of finance, one crucial legal and institutional tool stands as a bulwark against money laundering and criminal proceeds: the Anti-Money Laundering (AML) framework. In the Democratic People’s Republic of Korea (DPRK), the Korea Financial Intelligence Unit (KoFIU) plays a pivotal role in detecting and preventing domestic and international money laundering.

Understanding Money Laundering and the Role of FIUs

  • Money laundering: The act of disguising the fact of acquisition and disposal of assets or concealing such assets with the purpose of evading taxes or concealing criminal proceeds.
  • FIUs: Central, unified government bodies that collect, analyze, and disseminate suspicious money laundering-related transactions (STRs) to law enforcement agencies (LEAs).

KoFIU’s Role and Composition

  • Established in 2001, initially housed within the Ministry of Finance and Economy
  • Transfer to the Financial Services Commission (FSC) in 2008
  • Workforce comprises of AML/CFT experts from various government agencies

Relevant AML/CFT Legislation in South Korea

  1. The Financial Transaction Reports Act (FTRA): Adopts the Suspicious Transaction Report (STR) system, mandatory for financial institutions to report suspected transactions to KoFIU
  2. Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics
  3. Act on Regulation and Punishment of Criminal Proceeds Concealment
  4. Act on Prohibition against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction

The Importance of the FTRA

  • Adoption of the STR system
  • Allowing foreign exchange of information based on reciprocity
  • Mandating financial institutions to report all suspicious transactions to KoFIU since December 22, 2008

KoFIU’s Operations and Collaboration

  • Effectively handles cross-border money laundering activities
  • Closely working with other domestic agencies
  • Receiving information from foreign FIUs

International Participation and Collaboration

  • Actively participating in international network projects
  • Collaborating with other FIUs for a coordinated effort against money laundering and other financial crimes.

Penalties under the Proceeds of Crime Act (POCA)

  • Criminalizes money laundering and concealment of criminal proceeds, punishing evaders with imprisonment of up to five years or a fine of up to KRW 30 million.