Financial Crime World

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Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Regulations in South Korea

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Overview of STRs and CTRs

The Korean government has implemented regulations to combat money laundering and terrorist financing, specifically focusing on Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs). These reports are crucial measures to prevent financial crimes and maintain the integrity of the financial system.

Definition of STRs

A Suspicious Transaction Report is a core measure to fight money laundering and terrorist financing. Financial institutions and casinos are required to file STRs when they have reasonable grounds, based on their expertise and subjective judgment, to suspect that the funds they received are criminal proceeds or that the customer is engaged in money laundering or terrorist financing.

Basic Framework of STRs

  • Financial institutions and casinos must report to the Korea Financial Intelligence Unit (KoFIU) when they have “reasonable grounds” to suspect that the funds they received in relation to a financial transaction are illegal assets, or that the customer is engaged in money laundering or financing for offences of public intimidation.
  • They must also report to the KoFIU when they have reported to a law enforcement agency funds that they have come to know are criminal proceeds or transactions that they have come to know are involved in money laundering.

Filing an STR

  1. If, based on his/her expertise, experience, and the usual transaction profile of a customer, a front desk teller suspects that a transaction or a movement of funds is related to money laundering or to terrorist financing, he/she will report it to the reporting officer in his or her organization.
  2. The reporting officer will review what was reported by the front desk teller and, if there are reasonable grounds for ML/TF suspicion, he/she will report the transaction using a standard STR form.

Dissemination of STRs

  • The KoFIU will conduct comprehensive analysis of all the STRs it receives based on the information contained in the STR, and on additional information that it obtains, such as foreign exchange transactions data, credit information, and information provided by foreign FIUs, etc.
  • If it finds reasonable grounds to suspect that the reported transaction is related to money laundering or terrorist financing, it will pass on the STR to an appropriate law enforcement agency.

Key Points for CTRs

Definition of CTRs

A Currency Transaction Report (CTR) is a report made by financial institutions and casinos (“reporting entities”) when they have received or paid out cash in transactions that meet certain objective criteria.

Utilization of CTRs

  • The CTR data are used in strategic analysis and as supplementary data for the individual analysis of STRs.
  • The effectiveness of information analysis is expected to be enhanced when STR data are analyzed in conjunction with CTR data.

Conclusion

Overall, these reports play a crucial role in identifying and preventing money laundering and terrorist financing activities.