Korea Must Do More to Tackle Financial Crime

Recent Assessment Highlights Gaps in Korea’s Anti-Money Laundering Efforts

In a recent assessment by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG), it was concluded that while Korea has a sound legal framework to combat money laundering and terrorist financing, there is still room for improvement in preventing government and public officials from laundering corruption proceeds.

Key Findings and Recommendations

• Tax crimes, illegal gambling, fraud, and corruption are the most significant proceeds-generating crimes that pose high money laundering risks in Korea.
• The country needs to strengthen its efforts to prevent politicians and individuals with international connections from laundering corruption proceeds.
• Korean authorities should extend their anti-money laundering (AML) and counter terrorist financing (CFT) measures to include the prosecution of laundering proceeds from all tax crimes.
• Financial institutions and casinos in Korea generally have a good understanding of money laundering and terrorist financing risks, but there is a need for measures to prevent accountants, lawyers, real estate agents, and dealers in precious metals and stones from being misused for financial crimes.

Areas for Improvement

• Asset freezing: Korea needs to improve its ability to freeze assets under the United Nations sanctions regime.
• International cooperation: Korean authorities could make more use of international cooperation tools to tackle asset flight and offshore tax crime cases.
• Non-financial businesses and professions: The country should further utilize available mechanisms to deprive criminals of their proceeds, particularly in addressing non-financial businesses and professions.

Progress Made

Since its last assessment in 2008, Korea has made significant progress in strengthening its AML/CFT framework. However, there are still areas for improvement, particularly in addressing tax crimes, non-financial businesses and professions, and politically exposed persons.

By implementing these recommendations, Korea can further strengthen its efforts to prevent financial crime and protect the integrity of its financial system.