Financial Crime World

Korea’s Battle Against Money Laundering: Understanding the Laws and Penalties

Money laundering has become a significant concern globally, with many countries cracking down on individuals and organizations involved in these illicit activities. In South Korea, the government has taken steps to strengthen its anti-money laundering laws and enforcement measures.

Key Government Entities Involved

The Prosecution: Primary Authority for Investigation and Prosecution

The prosecution is the primary authority responsible for investigating and prosecuting money laundering cases in South Korea.

Legislation: Key Pieces of Legislation Prescribing Money Laundering as a Criminal Offense

  • Act on Regulation and Punishment of Criminal Proceeds Concealment (Criminal Proceeds Regulation Act): This legislation prescribes money laundering as a criminal offense.
  • Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics, Etc (Special Act on Narcotics Illegal Trafficking): This legislation also deals with money laundering offenses related to narcotics.

Who Can Be Prosecuted?

Both natural and legal persons can be prosecuted for money laundering in South Korea. The representative of a corporation or an agent/employer of a corporation or individual who commits money laundering can face penalties, including fines, if the corporation or individual fails to demonstrate adequate supervision over their business affairs.

What Constitutes Money Laundering?

Definition of Money Laundering

Money laundering is defined as concealing and disguising criminal proceeds, attempting, preparing, or conspiring to disguise the acquisition or disposition of criminal proceeds, or concealing the origin of criminal proceeds. The Act on Reporting and Using Specified Financial Transaction Information sets forth a comprehensive list of money laundering offenses.

Predicate Offenses

Article 2 of the Criminal Proceeds Regulation Act and the Annex Table set forth a complete list of predicate offenses, including crimes related to:

  • Sex trafficking
  • Bribery
  • Illegal moving of property
  • Genocide
  • Terrorism financing
  • Narcotics-related crimes under the Special Act on Narcotics Illegal Trafficking

Penalties

Imprisonment and Fines for Money Laundering Offenders

Money laundering offenders can face imprisonment with labor for up to five years or fines not exceeding 30 million won. Those who attempt money laundering may be punished by imprisonment with labor for up to two years or fines not exceeding 10 million won.

Penalties for Corporations and Individuals Failing to Demonstrate Adequate Supervision

Corporations and individuals that fail to demonstrate adequate supervision over their business affairs can also face penalties.

Asset Forfeiture

The Criminal Proceeds Regulation Act allows for the confiscation of criminal proceeds, properties derived from criminal proceeds, or properties related to concealment. The court may grant an order of preservation for confiscation or collection with respect to those properties prior to or after indictment.

Limitation Periods

Limitation Period for Money Laundering Prosecutions

The limitation period for money laundering prosecutions is seven years from the date on which the money laundering offense ends. However, when a criminal stays in a country other than South Korea for the purpose of evading penalties, their limitation period ceases during that time.

In conclusion, South Korea has taken significant steps to combat money laundering through strengthened laws and enforcement measures. Individuals and organizations involved in these illicit activities face severe penalties, including imprisonment, fines, and asset forfeiture.