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Korea’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations: A Comprehensive Overview

Seoul, South Korea - In an effort to combat financial crimes and maintain international cooperation, the Korean government has established a robust anti-money laundering and combating the financing of terrorism (AML/CFT) regime.

Key Statutes

Two primary statutes form the foundation of Korea’s AML/CFT regime:

  • Financial Transaction Reports Act (FTRA): This act serves as the legal foundation for the Korea Financial Intelligence Unit’s (KoFIU) operation, mandating financial institutions to implement customer due diligence (CDD), suspicious transaction reporting (STR), and cash transaction reporting (CRT) measures.
  • Act on Prohibition against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction: This act criminalizes terrorism financing activity and prohibits financial transactions with restricted individuals, legal persons, and entities without prior approval from the Financial Services Commission (FSC).

Regulations

Korea has issued a range of regulations to further strengthen its AML/CFT regime. Key regulations include:

  • Financial Transaction Report and Supervision Regulation: This regulation provides guidelines for financial institutions on reporting transactions and implementing supervisory measures.
  • Monitoring and Sanctioning Regulation on Financial Transaction Report and Supervision: This regulation outlines the monitoring and sanctioning procedures for financial institutions that fail to comply with AML/CFT requirements.
  • Business Regulations on Anti-Money Laundering and Anti-Terrorism Financing: This regulation provides guidelines for businesses on implementing anti-money laundering and anti-terrorism financing measures.
  • Regulations on Prohibition against the Financing of Terrorism: This regulation outlines the procedures for prohibiting financial transactions with restricted individuals, legal persons, and entities.
  • Regulations on the Designation/Revocation of Persons Subject to Restrictions on Financial Transactions: This regulation provides guidelines for designating or revoking restrictions on financial transactions.

Conclusion

These regulations provide a comprehensive framework for financial institutions, businesses, and individuals to comply with AML/CFT requirements, contributing to Korea’s efforts to maintain its international reputation as a reliable and transparent financial hub.