Financial Crime World

Korea Fails to Prevent Government Officials from Laundering Corruption Proceeds: Report

Overview

A recent assessment by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) has highlighted areas where Korea needs to improve its anti-money laundering and counter terrorist financing (AML/CFT) system. While Korea has a sound legal framework in place, it lacks measures to prevent government officials from laundering corruption proceeds.

Strengths of Korea’s AML/CFT System

  • Korea has a continuous risk assessment process that provides authorities with a good understanding of the risks the country faces.
  • The country is proactive in preventing the spread of weapons of mass destruction and has a high level of awareness of proliferation financing risks.
  • Korean financial institutions and casinos have a good understanding of the risks they face.

Areas for Improvement

  • Extending AML/CFT measures to prevent the laundering of proceeds from all tax crimes
  • Expanding measures to prevent politically exposed persons - both domestic and international - from laundering corruption proceeds
  • Implementing measures to prevent accountants, lawyers, real estate agents, and dealers in precious metals and stones from being misused for money laundering or terrorist financing
  • Utilizing international cooperation tools to combat asset flight and offshore tax crimes
  • Making better use of available mechanisms to recover assets from criminals

Concerns and Recommendations

  • Korea’s lack of measures to prevent government officials from laundering corruption proceeds is a significant concern.
  • High-level corruption cases have highlighted the risk of money laundering in these instances.
  • The report called on Korea to take concrete steps to address this issue and improve its overall AML/CFT framework.

Conclusion

The FATF adopted the report at its February 2020 Plenary meeting, highlighting Korea’s ongoing efforts to strengthen its financial crime prevention measures. However, the country still needs to address several areas of concern in order to effectively combat financial crimes.