Financial Crime World

Financial Crime Definition in Korea, Republic of: A Legal and Institutional Tool to Detect and Prevent Money Laundering

In a rapidly globalizing economy, financial crime has become a significant concern for governments and financial institutions worldwide. In Korea, Republic of, the Financial Intelligence Unit (KoFIU) plays a crucial role in detecting and preventing money laundering.

Definition of Money Laundering in Korea

According to Article 2(5) of the Financial Transaction Reports Act (FTRA), money laundering is defined as:

  • Criminal acts of disguising the fact of acquisition and disposal of assets or concealing such assets
  • Concealing assets for the purpose of evading taxes

The Role of KoFIU

Established in 2001 under the FTRA, the KoFIU serves as a central, unified government body that:

  • Collects and analyzes money laundering-related reports from financial institutions
  • Disseminates these reports to law enforcement agencies for further action

Composition of KoFIU

The KoFIU is staffed with AML/CFT experts from various government agencies, including:

  • Financial Services Commission
  • Ministry of Justice
  • National Police Agency
  • National Tax Service
  • Korea Customs Service
  • Financial Supervisory Service

Legislations and Regulations

Korea has four major AML/CFT legislations in place:

  • Financial Transaction Reports Act (FTRA): a legal ground for adopting Suspicious Transaction Reports (STRs)
  • Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics
  • Act on Regulation and Punishment of Criminal Proceeds Concealment
  • Act on Prohibition against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction

FIU Information System

The KoFIU built an FIU Information System in November 2002 to:

  • Identify and analyze individuals involved in money laundering activities through foreign transactions, financial information, etc.
  • Provide consistent training to financial institutions
  • Actively participate in global network projects

Conclusion

In conclusion, the KoFIU plays a vital role in detecting and preventing money laundering in Korea, Republic of, by:

  • Collecting and analyzing specific financial transaction data
  • Operating relevant international cooperation
  • Setting up a system to coordinate with domestic agencies
  • Applying sanctions under relevant laws