The Amendment to the Act on Reporting and Using Specified Financial Transaction Information of Korea (hereinafter as “Amended Financial Transaction Information Act of Korea”) focuses on strengthening Korean legal provisions related to money laundering as well as implementing a “global standard” proposed by the Financial Action Task Force on Money Laundering. The Amended Financial Transaction Information Act of Korea shall enter into force on July 1, 2019.
Major provisions of the Korean Act on Financial Transaction Information
The purpose of the Act on Reporting and Using Specified Financial Transaction Information is to “…provide for matters concerning reporting on and use of specified financial transaction information necessary to regulate money laundering and financing of terrorism through financial transactions, such as foreign exchange transactions, thereby contributing to preventing crimes and further establishing a sound and transparent financial system.” (Art 1).
The major provisions of the prior Act are:
- Transactions of expected illegal assets shall be reported by the concerned Korean financial company directly to the Commissioner of the Korea Financial Intelligence Unit (Art 4).
- Large cash transactions (KRW 50,000,000 or more) or equivalent in cash, which a Korean financial institution pays or receives from another party in Korea (except from another financial institution, the state or a local government) shall be reported “…to the Commissioner of the Korea Financial Intelligence Unit within 30 days.” (Art 4-2).
- Korean Financial institutions shall set up measures such as publishing guidelines, appointing certain employees as responsible persons for these reports (regarding Art 4 and 4-2) etc. in order to effectively prevent money laundering and financing of terrorism.
- Korean Financial institutions shall gather the necessary information about their customers (Customer Due Diligence) in order to prevent money laundering and financing of terrorism (Art 5-2).
- Cooperation and exchanging information with foreign financial intelligence services and investigation agencies in order to meet the requirements in accordance with the Act (Art 7 to 9).
Key Figures of the Amendment to the Act on Financial Transaction Information in Korea
- Korean Financial companies shall preserve documents, communication and other relevant material produced while executing their reporting-obligations according to the Act for five years from the date, in which financial transactions relations terminate.
- Certain Korean financial companies shall be exempted from the mandatory measures in order to prevent money laundering and financing of terrorism, in consideration of the type and scale of transactions. The purpose to exempt some smaller financial institutions.
- If a foreign country’s agency requests inspection of documents when relevant and necessary.
- An employee of a Korean financial institution, which is responsible for and fails to file a report, to take verification measures or to comply with, refuses, interferes with, or evades an order, direction or inspection shall be punished with an administrative fine.
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