Financial Crime World

Korea’s Efforts Against Money Laundering and Terrorist Financing

The Korean government has been actively working to combat money laundering and terrorist financing through a series of key legislations. In this article, we will explore the three main laws that guide these efforts: the Financial Transaction Reports Act (FTRA), the Proceeds of Crime Act (POCA), and the Act on Prohibition Against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction (PFOPIA).

Preventive Approach: FTRA

The FTRA takes a preventive approach to combat money laundering and terrorist financing. To achieve this, it mandates measures such as:

  • Establishment and operation of the Korean Financial Intelligence Unit (KoFIU)
  • Customer due diligence (CDD) by financial institutions
  • Suspicious transaction reports (STRs) and cash transaction reports (CTRs)

These measures help identify and prevent illegal activities, making it more difficult for criminals to launder money or finance terrorist activities.

Criminalization: POCA

The POCA criminalizes money laundering, allowing the government to seize and confiscate illicit proceeds. The legislation also grants authorities the authority to:

  • Preserve and confiscate criminal assets
  • Take legal action against individuals and entities involved in money laundering

By criminalizing money laundering, POCA provides a strong deterrent for those who would engage in illegal activities.

Targeted Approach: PFOPIA

The PFOPIA takes a more targeted approach by making it illegal to finance terrorism and proliferation of weapons of mass destruction. Under this law:

  • Financial institutions are prohibited from conducting transactions with individuals and entities designated by the Financial Services Commission without prior approval
  • Transactions with suspected terrorist organizations or individuals are strictly monitored and regulated

This legislation ensures that financial institutions do not inadvertently provide support to terrorist activities.

Conclusion

These three key legislations have been instrumental in Korea’s efforts to tackle money laundering and terrorist financing. As the country continues to shape its anti-money laundering (AML) and combating the financing of terrorism (CFT) strategies, these regulations will likely play a crucial role in guiding future initiatives.