Financial Crime World

Korea, Democratic People’s Republic of Faces Calls to Strengthen Anti-Money Laundering Efforts

International Review Highlights Areas for Improvement in Combating Money Laundering and Terrorist Financing

The Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) have published a comprehensive review of Korea’s anti-money laundering and counter terrorist financing (AML/CFT) system, identifying key areas where the country can enhance its efforts to combat money laundering and terrorist financing.

Key Findings

  • Need for improvement in preventing government and public officials from laundering corruption proceeds: While Korea has a sound legal framework in place, it needs to do more to prevent government and public officials from laundering the proceeds of corruption.
  • Significant risks from tax crimes, illegal gambling, fraud, and corruption: Tax crimes, illegal gambling, fraud, and corruption are the most significant proceeds-generating crimes presenting high money laundering risks.

Areas for Improvement

  • Enhance asset freezing under UN sanctions regime: Korea should improve its ability to freeze assets under the United Nations sanctions regime.
  • Extend AML/CFT measures to include prosecution of all tax crimes: The country should extend its AML/CFT measures to include the prosecution of laundering proceeds from all tax crimes.
  • Expand anti-money laundering efforts to prevent politically exposed persons (PEPs) from laundering corruption proceeds: Korea should expand its anti-money laundering efforts to prevent PEPs, both domestic and international, from laundering proceeds of corruption.

Recommendations

  • Improve use of international cooperation tools: Korean authorities should make more use of international cooperation tools to pursue asset flight and offshore tax crime cases and seek beneficial ownership information.
  • Implement measures to prevent misuse by non-financial businesses and professions: Measures should be implemented to prevent accountants, lawyers, real estate agents, and dealers in precious metals and stones from being misused for money laundering and terrorist financing purposes.

Conclusion

The review acknowledges Korea’s significant progress since its last assessment in 2008 but emphasizes the need for further strengthening of its AML/CFT framework to address tax crimes, non-financial businesses, and professions, as well as politically exposed persons.