Financial Crime World

Assessment Report on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Measures in South Korea

The Financial Action Task Force (FATF) has conducted an assessment of the AML/CFT framework in South Korea, highlighting both strengths and weaknesses. This report provides a comprehensive overview of Korea’s AML/CFT measures, including key findings and recommendations.

Key Findings

Robustness of FIs and Casinos

  • Financial institutions (FIs) and casinos are largely robust, with a good understanding of money laundering/terrorist financing (ML/TF) risks in their sectors.
  • Bullet points:
    • Good understanding of ML/TF risks
    • Robust implementation of AML/CFT measures

Complexity of Institutional Framework

  • Korea’s institutional and supervisory framework is complex, but entrusted agencies have excellent cooperation and coordination.
  • Bullet points:
    • Complex framework
    • Excellent cooperation and coordination among agencies

Gaps in Supervision

  • Supervision by the Financial Intelligence Unit (KoFIU) and the Financial Supervisory Service (FSS) would benefit from increased resources.
  • The supervisor of casinos in Jeju takes a rules-based approach to supervision.
  • Bullet points:
    • Need for increased resources
    • Rules-based approach to supervision
  • Korea has identified types of legal persons at risk of ML/TF, but authorities lack clear understanding of why these entities are vulnerable and how to effectively mitigate risks.
  • Bullet points:
    • Identified high-risk entities
    • Lack of understanding on vulnerabilities and mitigation strategies

Transparency and Beneficial Ownership (BO)

  • Basic and legal ownership information on legal persons is publicly available through a comprehensive network of registries, but information may not always be accurate and up-to-date.
  • Bullet points:
    • Publicly available information
    • Potential for inaccuracies and outdated information

International Cooperation

  • Korea has an effective framework for seeking and providing mutual legal assistance (MLA) and extradition. Co-operation under bilateral treaties is particularly effective.
  • Bullet points:
    • Effective framework for MLA and extradition
    • Strong cooperation under bilateral treaties

Recommendations

  1. Extend the AML/CFT framework to apply to all Designated Non-Financial Businesses and Professions (DNFBPs):
    • Ensure that DNFBPs are subject to AML/CFT regulations.
  2. Expand the scope of AML/CFT obligations to include domestic Politically Exposed Persons (PEPs) and PEPs of international organizations:
    • Include domestic PEPs and PEPs of international organizations in AML/CFT obligations.
  3. Amend the law to expand the range of tax crimes that are ML predicate offenses:
    • Update the law to include additional tax crimes as ML predicate offenses.
  4. Continue exploring measures to promote actual recovery of assets ordered for confiscation:
    • Implement strategies to ensure effective asset recovery.

Overall, while Korea has made significant progress in strengthening its AML/CFT framework, there remain areas for improvement, particularly in addressing gaps in supervision and enhancing international cooperation.