Financial Crime World

South Korea’s Crackdown on White-Collar Crime: A Legal Overview

Last Updated: October 24, 2023

In the rapidly evolving business landscape of South Korea, financial crimes continue to pose a significant challenge to both local and international companies. This article provides an overview of the legal framework, enforcement, and key types of white-collar offenses in the Republic of Korea.

South Korea’s Legal Powerhouse: Bae, Kim & Lee LLC (BKL)

  • Overview of Bae, Kim & Lee LLC (BKL)
    • Full-service law firm in South Korea
    • Expertise in white-collar criminal defense
    • Offices in major cities worldwide

Classification of Criminal Offenses

  • Absence of misdemeanor or felony categories
  • Statutory requirements for criminal actions
    • Absence of exculpatory circumstances
    • Legal culpability determination

Statute of Limitations

  • Variation based on maximum sentence
  • Ranges from five to 15 years

Extraterritorial Reach

  • Monopoly Regulation and Fair Trade Act (MRFTA)
  • Foreign Bribery Prevention in International Business Transactions Act (FBPA)
  • Korean Criminal Code (KCC)
  • Prosecution of foreigners engaging in certain crimes

Corporate Liability and Personal Liability

  • Only natural persons can be subject to criminal prosecution
  • Exceptions for specific statutory provisions
  • Corporate entities may not be held liable for offenses prior to a merger or acquisition

Damages and Compensation

  • Victims can seek compensation through civil claims
  • Criminal courts rarely assess damages

Recent Developments and Key Enforcement Authorities

  • Establishment of the Corruption Investigation Office for High-ranking Officials
  • Transferred investigative powers from the police to the prosecutors
  • Constitutional challenge of controversial new bills

Key Enforcement Authorities

  • National Police Agency (NPA)
  • Prosecutors’ Office (PO)
  • Korea Fair Trade Commission (KFTC)
  • National Tax Service (NTS)
  • Korea Customs Services (KCS)
  • Financial Supervisory Service (FSS)
  • Financial Services Commission (FSC)
  • Securities and Futures Commission (SFC)

Initiating White-Collar Criminal Investigations

  • Criminal complaints from victims
  • Petitions from third parties
  • Whistle-blowing by insiders, civic groups, labor unions, or leniency applications
  • Cartel investigations initiated by leniency applications

Powers of Investigation

  • Various means to gather evidence
    • Requesting information
    • Conducting dawn raids
    • Requesting interviews
    • No concept of “privilege”

Internal Investigations

  • Proactive steps to prevent and deter misconduct
  • Impact on investigation scope and outcome
  • Final sentence
  • Bilateral treaties for mutual assistance in criminal matters (MLATs)
  • Collaboration with foreign counterparts using memorandums of understanding or reciprocity
  • Privacy laws and other laws protecting financial transaction secrecy
  • Extradition treaties with 33 countries

Understanding South Korea’s legal framework for white-collar crimes and collaborating with experienced legal counsel is crucial for mitigating risks and navigating potential challenges as businesses expand their operations in South Korea and engage in international transactions.