Financial Crime World

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Korea’s Aggressive Approach to Combating Financial Crime

Seoul, Republic of Korea

The Korean government has taken a firm stance in its battle against financial crime, demonstrating a commitment to protecting the integrity of its financial system. At the heart of this strategy are comprehensive client due diligence (CDD), rigorous transaction monitoring, and prompt reporting of suspicious transactions by financial institutions.

AML Obligations for Institutions in Korea

In Korea, various institutions face significant risks associated with money laundering, including:

  • Casinos
  • Insurance companies
  • Mutual savings banks
  • Financial firms
  • Credit cooperatives
  • Credit unions
  • Trust companies
  • Commercial banks
  • Securities companies

To mitigate these risks, these institutions are required to adhere to stringent Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) regulations. Every financial entity in Korea is also obligated to comply with the rigorous Customer Due Diligence (CDD) requirements.

Korea’s AML Regulations

Through its AML rules, Korea has established a robust legal framework to combat money laundering and terrorism financing. These regulations impose stringent obligations on various financial institutions, including:

  • Conducting client due diligence
  • Monitoring transactions
  • Reporting suspicious activity to the Korea Financial Intelligence Unit (KoFIU)

Key AML Regulations in Korea

  • Act on Reporting and Using Specified Financial Transaction Information
  • Prohibition Against the Financing of Terrorism Act Regulation and Punishment of Criminal Proceeds Concealment Act
  • Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics
  • Real Name Financial Transactions and Privacy Law
  • Foreign Currency Transactions Act, Criminal Law, and Criminal Procedure Law

FATF Status

Korea has been a member of the Financial Action Task Force (FATF) since 2009. In 2020, the FATF and its associate member APG jointly evaluated Korea’s measures to combat money laundering and terrorism financing, finding that the country has a robust legal system in place but needs to improve its efforts to prevent public servants and government officials from laundering corrupt funds.

According to the evaluation:

  • Compliant for 12 of the FATF 40 Recommendations
  • Largely Compliant for 20 of the FATF 40 Recommendations
  • Highly Effective for 0 areas of Effectiveness
  • Substantially Effective for 5 areas of Effectiveness

AML Solutions for Korea

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With our Sanction Scanner solution, you not only ensure legal compliance but also bolster your reputation for transparency and integrity in Korea’s competitive business landscape, paving the way for long-term success.