South Korean Authorities Crack Down on Money Laundering and Terrorist Financing

Strengthening Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Efforts

Seoul, Korea - In a bid to combat money laundering and terrorist financing, South Korean authorities have implemented a range of legislation aimed at regulating financial institutions. The country’s AML/CFT laws are seen as crucial in preventing illicit financial activities.

Key Legislation and Measures

• Financial Transaction Reports Act (FTRA): Mandates preventive measures for financial institutions, including the establishment of a central authority, the Korean Financial Intelligence Unit (KoFIU), and customer due diligence requirements.
• Proceeds of Crime Act (POCA): Makes money laundering a criminal offense and empowers the government to seize and confiscate assets derived from illicit activities.
• Act on Prohibition Against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction (PFOPIA): Targets terrorist financing by prohibiting financial transactions with designated individuals and entities without prior approval from the Financial Services Commission.

Regulatory Requirements for Financial Institutions

Financial institutions in South Korea are required to:

• File suspicious transaction reports (STRs) and cash transaction reports (CTRs) with the authorities.
• Implement customer due diligence requirements, including verifying the identity of customers and monitoring transactions.
• Establish a central authority, such as the KoFIU, to detect and prevent money laundering activities.

Strengthening AML/CFT Framework

The implementation of these laws has been hailed as a significant step forward in South Korea’s efforts to combat money laundering and terrorist financing. As the country continues to strengthen its AML/CFT framework, financial institutions are under pressure to adhere to strict regulatory requirements.