Korea’s Anti-Money Laundering and Counter-Terrorist Financing Efforts Assessed by Global Watchdogs
Comprehensive Review Reveals Both Strengths and Weaknesses
The Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) have conducted a comprehensive review of Korea’s anti-money laundering and counter-terrorist financing (AML/CFT) system. The assessment highlights both the progress made by Korea since 2008 and the challenges that still need to be addressed.
Sound Legal Framework, but Room for Improvement
The report notes that Korea has a sound legal framework in place to combat money laundering and terrorist financing. However, it also identifies areas where improvement is needed:
- Preventing government and public officials from laundering proceeds of corruption: The authorities need to take further action to prevent corrupt individuals from using their positions for illegal activities.
- Freezing assets under United Nations sanctions regimes: Korea needs to improve its ability to freeze assets related to sanctioned entities and individuals.
- Extending prosecution powers to include all tax crimes: The country’s prosecution powers should be expanded to cover all tax-related crimes.
Significant Money-Laundering Risks Identified
The report identifies the following as significant money-laundering risks facing Korea:
- Fraud
- Corruption
- Illegal gambling
- Tax crimes
To combat these threats, a more proactive approach is needed. The country is also urged to expand its AML/CFT measures to prevent corrupt individuals, including those from international organizations, from laundering proceeds of corruption.
Financial Institutions and Casinos Well-Equipped, but More Can Be Done
Korea’s financial institutions and casinos are generally well-equipped to mitigate money-laundering risks. However, the report recommends implementing measures to prevent professionals such as:
- Accountants
- Lawyers
- Real estate agents
- Precious metal dealers
from being misused for illegal activities.
Financial Intelligence and Asset Recovery Commended
The authorities’ use of financial intelligence to investigate criminals and terrorists is commendable. The report highlights the importance of asset recovery, with a priority on depriving criminals of their ill-gotten gains.
Progress Made, but More Work Needed
Since its last assessment in 2008, Korea has made significant strides in strengthening its AML/CFT framework. To build on this progress, the government is urged to:
- Strengthen its AML/CFT framework to address tax crimes, non-financial businesses and professions, and politically exposed persons.
- Expand its AML/CFT measures to prevent corrupt individuals from laundering proceeds of corruption.
The FATF adopted this report at its February 2020 plenary meeting, emphasizing the importance of Korea’s continued efforts to combat money laundering and terrorist financing.