Financial Crime World

Korea, Democratic People’s Republic of: Financial Crime Control Remains a Work in Progress

A Comprehensive Review by FATF and APG Reveals Areas for Improvement

The Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) have conducted an in-depth review of Korea’s anti-money laundering and counter terrorist financing (AML/CFT) system. The assessment highlights several areas where the country can enhance its efforts to combat financial crime.

Korea has a robust legal framework in place to tackle money laundering and terrorist financing. However, there is a need to strengthen measures to prevent government and public officials from laundering the proceeds of corruption. This includes:

  • Implementing effective policies to address tax crimes
  • Enhancing transparency in asset ownership and control
  • Improving accountability among public officials

Proactive Approach to Proliferation Financing Risks

Korea has demonstrated a proactive approach to preventing the spread of weapons of mass destruction and is aware of proliferation financing risks. However, there are gaps in its ability to freeze assets under the United Nations sanctions regime.

Addressing Gaps in AML/CFT Measures

The report highlights that Korea currently faces low terrorist financing risks but notes that the country should extend its AML/CFT measures to include the prosecution of laundering proceeds from all tax crimes. This includes:

  • Enhancing collaboration between government agencies and the private sector
  • Implementing effective risk-based approaches
  • Strengthening international cooperation tools

Asset Recovery and Beneficial Ownership Information

Asset recovery is a priority for Korea, with authorities able to deprive criminals of a reasonable amount of their proceeds. However, there is scope for improvement in:

  • Making further use of available mechanisms to strengthen the AML/CFT framework
  • Addressing tax crimes, non-financial businesses, and professions, and politically exposed persons

The FATF adopted this report at its February 2020 Plenary meeting, acknowledging Korea’s ongoing efforts to enhance financial crime control measures.