Financial Crime World

Title: “Korea’s Anti-Money Laundering and Counter-Terrorist Financing Measures Assessed in New Report”

Background

The Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering (APG) have published a Mutual Evaluation Report on the Republic of Korea’s anti-money laundering (AML) and counter-terrorist financing (CFT) measures. The report evaluates the effectiveness of Korea’s AML/CFT system.

History of Korea’s AML/CFT Efforts

Since the mid-1990s, Korea has shown a commitment to combating money laundering and terrorist financing. The country has become an active member of both the APG and the FATF observer.

FATF Evaluation

An evaluation team, consisting of experts from Japan, Hong Kong, Spain, Macao, the United States, the FATF, and APG secretariats, reviewed Korea’s institutional framework, relevant laws and regulations, and the regulatory and other systems in place to deter ML and TF through financial institutions and designated non-financial businesses and professions.

Key Findings

Political Commitment

  1. There has been political commitment from the government and the private sector for over a decade, with a strong emphasis on AML efforts.

CFT System

  1. The CFT system in Korea is relatively new; it came into effect in December 2008 and could be further strengthened.

Prevalent Offenses

  1. The most common money laundering techniques in Korea include fraud, theft, forgery, copyright and trademark violations, and online gambling. Fraud and forgery are the most common techniques, with a significant number of transactions taking place in cash or accounts in other people’s names.

Terrorist Financing

  1. Despite no confirmed cases of terrorist financing in Korea, measures to combat it should be strengthened given the country’s strategic location as a potential transit point for illicit funds or goods.
  1. Korea’s legal framework includes two statutes that criminalize money laundering – the 1995 Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics, Psychotropic Substances and Hemp (ASPIT) and the 2001 Proceeds of Crime Act (POCA). However, some areas need improvement, such as:
    • Expanding the list of predicate offenses to include terrorism and terrorist financing.
    • Increasing the effectiveness and dissuasiveness of legal penalties for ML and non-compliance with AML/CFT obligations.

Recommendations and Actions Taken

The FATF/APG Mutual Evaluation Report on Korea provides recommendations to address these issues and further strengthen the country’s AML/CFT system. Korea has already taken actions by amending laws since November 2008 and committing to take further steps to address the deficiencies identified in the report.