Financial Crime World

Korea’s Anti-Money Laundering Measures Under Review

Comprehensive Assessment by Financial Regulators

The Financial Action Task Force (FATF) and Asia-Pacific Group on Money Laundering (APG) have conducted a comprehensive review of Korea’s anti-money laundering and counter-terrorist financing (AML/CFT) system. The assessment highlights both progress and areas for improvement in Korea’s efforts to combat money laundering and terrorist financing.

While Korea has a sound legal framework in place, the assessment notes that more needs to be done to prevent government and public officials from laundering corruption proceeds. A continuous risk assessment process helps authorities understand the country’s vulnerabilities, with tax crimes, illegal gambling, fraud, and corruption being major sources of funds for money launderers.

Key Areas for Improvement

  • Preventing government and public officials from laundering corruption proceeds
  • Addressing gaps in freezing assets under United Nations sanctions
  • Extending legal framework to include prosecution of all tax crimes
  • Implementing measures to prevent misuse of accountants, lawyers, real estate agents, and precious metal dealers
  • Enhancing AML/CFT measures for non-financial businesses, professions, and politically exposed persons

Effective Policy and Operational Structures

Korean authorities have effective policy and operational structures in place, collaborating with government agencies and the private sector through a range of mechanisms. Financial institutions and casinos generally understand the money laundering and terrorist financing risks they face.

Good Results from Strengthened Framework

Since its last assessment in 2008, Korea has strengthened its AML/CFT framework, which is now delivering good results. However, the country needs to address tax crimes, non-financial businesses, professions, and politically exposed persons to further enhance its framework.

Roadmap for Improvement

The FATF adopted this report at its February 2020 Plenary meeting, providing a roadmap for Korea to strengthen its anti-money laundering measures and continue to combat financial crime. The report highlights significant money laundering risks from fraud and corruption cases, emphasizing the need for expanded AML/CFT measures to prevent laundering by politically exposed persons, both domestic and international.

Conclusion

Korea’s efforts to combat money laundering and terrorist financing are commendable, but there is still room for improvement. By addressing the key areas identified in this report, Korea can further strengthen its anti-money laundering measures and continue to protect its financial system from abuse.