Financial Crime World

Korea’s Banking Industry Plays Key Role in Preventing Financial Crime

Seoul, April 16, 2020 - FATF and APG Review Highlights Progress and Areas for Improvement

A comprehensive review by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) has found that Korea’s banking industry is making significant strides in preventing financial crime. However, there are still areas where improvement is needed.

The report assesses Korea’s anti-money laundering and counter terrorist financing (AML/CFT) system and highlights the country’s sound legal framework to tackle money laundering and terrorist financing. However, it notes that Korean authorities need to do more to stop government and public officials from laundering the proceeds of corruption.

Key Areas for Improvement

  • Prosecution of Laundering Proceeds of Tax Crimes: The report states that a number of high-level corruption cases in Korea have highlighted the significant money laundering risk from fraud and corruption. The country should expand its AML/CFT measures to prevent politically exposed persons from laundering proceeds of corruption.
  • Preventing Misuse by Non-Financial Businesses and Professions: The report notes that Korea should implement measures to prevent accountants, lawyers, real estate agents, and dealers in precious metals and stones from being misused for money laundering or terrorist financing.

Banking Industry’s Good Understanding of Money Laundering Risks

Korean financial institutions have been commended for their good understanding of the money laundering and terrorist financing risks they face. They are also making good use of financial intelligence to investigate criminals and terrorists, and asset recovery is a government priority. However, the report notes that the country can make further use of available mechanisms to deprive criminals of their proceeds.

Recommendations

The FATF and APG assessment has highlighted Korea’s progress in strengthening its AML/CFT framework but also identified areas for improvement to ensure that the country remains vigilant against financial crime. The report makes several recommendations for Korea, including:

  • Strengthening AML/CFT Framework: Strengthening its AML/CFT framework to address tax crimes, non-financial businesses and professions, and politically exposed persons.
  • Preventing Misuse by Non-Financial Businesses and Professions: Implementing measures to prevent accountants, lawyers, real estate agents, and dealers in precious metals and stones from being misused for money laundering or terrorist financing.
  • Expanding AML/CFT Measures: Expanding its AML/CFT measures to prevent politically exposed persons from laundering proceeds of corruption.
  • Making Further Use of Available Mechanisms: Making further use of available mechanisms to deprive criminals of their proceeds.

Conclusion

Korea’s banking industry has made significant strides in preventing financial crime, but there are still areas for improvement. The FATF and APG assessment provides a comprehensive review of Korea’s AML/CFT system and highlights the need for continued vigilance against financial crime. By implementing the recommendations outlined in this report, Korea can further strengthen its AML/CFT framework and ensure that its banking industry remains a key player in preventing financial crime.