Korea's measures to combat money laundering and terrorist financing

Mutual Evaluation Report Korea 2020

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The Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) assessed Korea’s anti-money laundering and counter terrorist financing (AML/CFT) system. The report is a comprehensive review of the effectiveness of Korea’s measures and their compliance with the FATF Recommendations. This includes an assessment of Korea’s actions to address the risks emanating from UN and domestically designated terrorists and terrorist organisations. The report does not address the justification that led to the domestic designation of an entity as a terrorist or terrorist group or organisation.

Paris, 16 April 2020 – Korea has a sound legal framework to tackle money laundering and terrorist financing and to confiscate funds involved, but it needs to do more to stop government and public officials from laundering the proceeds of corruption.

A continuous risk assessment process gives Korean authorities a good understanding of the risks the country faces. Tax crimes, illegal gambling, fraud and corruption in particular, are the most important proceeds-generating crimes that present the highest money laundering risks. Korea is proactively working to stop the spread of weapons of mass destruction and has a very high level of awareness of the proliferation financing risks it faces. However, it needs to address gaps in its ability to freeze assets under the United Nations sanctions regime.
The country currently faces low terrorist financing risks. Korea has a strong legal framework to combat money laundering and terrorist financing, but should extend this to include the prosecution of laundering of proceeds of all tax crimes.  

A number of high-level corruption cases in Korea have highlighted the significant money laundering risk from fraud and corruption.  The country should expand its AML/CFT measures to prevent politically exposed persons, both domestic and of international organisations from laundering proceeds of corruption.   

Korean authorities co-operate and collaborate effectively through policy and operational structures that bring together a broad range of government agencies and the private sector. Korea is effectively co-operating with foreign counterparts, including through a range of mechanisms to streamline mutual legal assistance.  The country could make more use of international co-operation tools to go after asset flight and offshore tax crime cases and seek and provide beneficial ownership information. 

Korean financial institutions and casinos generally have a good understanding of the money laundering and terrorist financing they face and the measures they need to take to mitigate them. However, Korea should implement measures to prevent accountants, lawyers, real estate agents and dealers in precious metals and stones from being misused for money laundering or terrorist financing. 

Korean law enforcement agencies make good use of financial intelligence to “follow the money” to investigate criminals and terrorists. Asset recovery is a government priority in Korea. Authorities are able to deprive criminals of a reasonable amount of their proceeds, but the country can make further use of available mechanisms.  

Since its last assessment in 2008, Korea has significantly strengthened its AML/CFT framework which is now delivering good results. The country needs to strengthen its AML/CFT framework to address tax crimes, non-financial businesses and professions and politically exposed persons. 

The FATF adopted this report at its February 2020 Plenary meeting.

Download the report: 

Mutual Evaluation Report Korea 2020  

Executive Summary-Mutual Evaluation Report Korea 2020  

APG

More information:  

FATF Recommendations

Methodology for assessing technical compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems

Consolidated table of assessment ratings - pdf format an overview of ratings that assessed countries obtained for effectiveness and technical compliance. 

 

Key findings, ratings and priority actions:

 

 

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