Money Laundering in South Korea: Understanding the Laws and Regulations

Introduction

In recent years, money laundering has become a growing concern globally, with many countries implementing strict laws and regulations to combat this financial crime. South Korea is no exception, with its own set of laws and regulations aimed at preventing and punishing money laundering.

What Constitutes Money Laundering in South Korea?

According to the Act on Regulation and Punishment of Criminal Proceeds Concealment (the “Criminal Proceeds Regulation Act”) and the Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics, Etc (the “Special Act on Narcotics Illegal Trafficking”), money laundering is defined as:

The concealment or disguise of criminal proceeds
The acquisition or disposition of such proceeds
The origin of such proceeds
Any property derived from them

Who Can Be Prosecuted for Money Laundering?

Both natural and legal persons can be prosecuted for money laundering in South Korea. Under article 7 of the Criminal Proceeds Regulation Act and article 18(1) of the Special Act on Narcotics Illegal Trafficking, when the representative of a corporation, or an agent or employer of, or any other person employed by, a corporation or individual commits money laundering in connection with the business affairs of that corporation or individual:

Both the individual and the corporation or individual will be punished by the same fine
To the extent that they fail to demonstrate the supervision obligation

Defences and Limitation Periods

There are no codified or common law defences to charges of money laundering. The limitation period for money laundering prosecutions is seven years from the date on which the money laundering offence ends. However, when a criminal stays in a country other than South Korea for the purpose of evading criminal penalties:

His or her limitation period ceases during such period of stay

Penalties and Forfeiture

Under the Criminal Proceeds Regulation Act, money laundering offenders and those who attempt money laundering are punished by:

Imprisonment with labour for not more than five years
A fine not exceeding 30 million won
A person who prepares or conspires for the purpose of committing money laundering will be punished by:
- Imprisonment with labour for not more than two years
- A fine not exceeding 10 million won

The Criminal Proceeds Regulation Act provides that related asset freezing, forfeiture, disgorgement, and victim compensation laws are in place to prevent and punish money laundering. When criminal proceeds related to money laundering are subject to potential confiscation or collection by the authorities:

The court may grant an order of preservation for confiscation
An order of preservation for collection with respect to those criminal proceeds

Conclusion

Money laundering is a serious financial crime that carries severe penalties in South Korea. The country’s laws and regulations aim to prevent and punish this crime, with a focus on related asset freezing, forfeiture, disgorgement, and victim compensation. Both natural and legal persons can be prosecuted for money laundering, and there are no codified or common law defences available. The limitation period for money laundering prosecutions is seven years from the date on which the money laundering offence ends.