Financial Crime World

Risk Assessment Reveals South Korea’s Compliance with Anti-Money Laundering and Counter-Terrorist Financing Efforts, But Room for Improvement Remains

Overview

A comprehensive review of South Korea’s anti-money laundering (AML) and counter-terrorist financing (CFT) system has been conducted by international authorities. The assessment reveals that the country has made significant progress in tackling financial crimes, but still faces challenges in addressing certain risks.

Strengths

  • South Korea’s legal framework is sound and effective in combating money laundering and terrorist financing.
  • Proactive efforts to combat weapons of mass destruction proliferation financing risks have been praised.
  • Tax crimes, illegal gambling, fraud, and corruption are among the most significant proceeds-generating crimes that pose a high risk of money laundering.

Areas for Improvement

  • Preventing government officials and public figures from engaging in corrupt activities.
  • Addressing gaps in freezing assets under United Nations sanctions and laundering of proceeds from all tax crimes.
  • Monitoring low terrorist financing risks closely.
  • Expanding AML/CFT measures to prevent money laundering by politically exposed persons, both domestic and international.
  • Improving cooperation with foreign counterparts in investigating and prosecuting financial crimes.

Financial Institutions and Casinos

  • Have a good understanding of the risks they face and the measures needed to mitigate them.
  • Need to improve preventing the misuse of accountants, lawyers, real estate agents, and dealers in precious metals and stones for money laundering or terrorist financing purposes.

Law Enforcement Agencies

  • Effectively use financial intelligence in investigating criminals and terrorists.
  • Can further utilize available mechanisms to deprive criminals of a reasonable amount of their proceeds.

Conclusion

South Korea has made significant progress since its last assessment in 2008, with its AML/CFT framework now delivering good results. However, the country needs to strengthen its framework to address tax crimes, non-financial businesses and professions, and politically exposed persons.

The Financial Action Task Force (FATF) adopted this report at its February 2020 Plenary meeting, highlighting the importance of ongoing efforts by South Korea to improve its financial compliance and risk management practices.