Korea's measures to combat money laundering and terrorist financing

Publication details

Language

English

Country

Korea

Mutual Evaluation Report Korea 2020

Filename
Mutual-Evaluation-Report-Korea-2020.pdf
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3 MB
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application/pdf
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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.

Ratings

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

Korea Mutual Evaluation 2020

R.1 - Assessing risk & applying risk-based approach
LC
R.2 - National cooperation and coordination
LC
R.3 - Money laundering offence
LC
R.4 - Confiscation and provisional measures
C
R.5 - Terrorist financing offence
LC
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
PC
R.7 - Targeted financial sanctions related to proliferation
PC
R.8 - Non-profit organisations
PC
R.9 - Financial institution secrecy laws
LC
R.10 - Customer due diligence
LC
R.11 - Record keeping
C
R.12 - Politically exposed persons
PC
R.13 - Correspondent banking
C
R.14 - Money or value transfer services
C
R.15 - New technologies
C
R.16 - Wire transfers
LC
R.17 - Reliance on third parties
C
R.18 - Internal controls and foreign branches and subsidiaries
LC
R.19 - Higher-risk countries
LC
R.20 - Reporting of suspicious transactions
C
R.21 - Tipping-off and confidentiality
C
R.22 - DNFBPs: Customer due diligence
PC
R.23 - DNFBPs: Other measures
PC
R.24 - Transparency and beneficial ownership of legal persons
PC
R.25 - Transparency and beneficial ownership of legal arrangements
LC
R.26 - Regulation and supervision of financial institutions
LC
R.27 - Powers of supervisors
C
R.28 - Regulation and supervision of DNFBPs
PC
R.29 - Financial intelligence units
C
R.30 - Responsibilities of law enforcement and investigative authorities
C
R.31 - Powers of law enforcement and investigative authorities
LC
R.32 - Cash couriers
LC
R.33 - Statistics
C
R.34 - Guidance and feedback
LC
R.35- Sanctions
LC
R.36 - International instruments
LC
R.37 - Mutual legal assistance
LC
R.38 - Mutual legal assistance: freezing and confiscation
C
R.39 - Extradition
LC
R.40 - Other forms of international cooperation
LC

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Korea Mutual Evaluation 2020

IO1
SE
IO2
SE
IO3
ME
IO4
ME
IO5
ME
IO6
SE
IO7
ME
IO8
SE
IO9
SE
IO10
ME
IO11
ME

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness

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