Financial Crime World

Korea’s Anti-Money Laundering Regime Faces Challenges in Tackling Corruption

A recent assessment by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) has highlighted several areas where Korea’s anti-money laundering and counter-terrorist financing (AML/CFT) system needs improvement. The report, released on April 16, praises Korea’s sound legal framework but notes that it requires further strengthening to effectively combat money laundering.

Key Challenges in Korea’s AML/CFT System

  • Tax Crimes, Illegal Gambling, Fraud, and Corruption: Korea faces significant risks from these crimes, which generate substantial proceeds that can be laundered. While the country has taken steps to address these risks, it needs to do more to prevent government officials and public servants from laundering the proceeds of corruption.
  • United Nations Sanctions Regimes: Korea’s ability to freeze assets under United Nations sanctions regimes is inadequate, leaving a gap in its efforts to combat proliferation financing.
  • Prosecution of Tax Crimes and Politically Exposed Persons: The report suggests that the country should extend its AML/CFT measures to include the prosecution of laundering of proceeds of all tax crimes and expand its efforts to prevent politically exposed persons from laundering the proceeds of corruption.

International Cooperation

  • Mutual Legal Assistance: Korea is praised for its effective collaboration with foreign counterparts, including through mechanisms to streamline mutual legal assistance.
  • Asset Flight and Offshore Tax Crime Cases: The report notes that the country could make more use of international tools to pursue asset flight and offshore tax crime cases, as well as seek and provide beneficial ownership information.

Mitigating Money Laundering Risks

  • Accountants, Lawyers, Real Estate Agents, and Dealers in Precious Metals and Stones: The report highlights the need for Korea to implement measures to prevent these professionals from being misused for money laundering or terrorist financing.
  • Financial Institutions and Casinos: While Korean financial institutions and casinos generally have a good understanding of the risks they face, the report suggests that further steps are needed to mitigate these threats.

Asset Recovery

  • Government Priority: Asset recovery is a government priority in Korea, but the country can make further use of available mechanisms to deprive criminals of their proceeds.

Overall, while Korea’s AML/CFT framework has made significant progress since its last assessment in 2008, it still requires strengthening in several key areas. The FATF adopted this report at its February 2020 Plenary meeting, highlighting the importance of continued efforts to improve Korea’s anti-money laundering regime and combat corruption.