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Home ›  Best Practices

South Korea Financial Transaction Reports Act – An Overview and Summary of Requirements

  • By: Staff Editor
  • Date: September 30, 2013

 
The Financial Transaction Reports Act in South Korea was enforced to preventcriminal and money laundering activities through financial transactions by stipulating provisions for establishment of a sound and transparent financial system. 
 
Report by the Financial Institutions
 
  1. The financial institutions should report the following cases to the Korea Financial Intelligence Unit Commissioner without any delay:
  • Cases where there are any reasonable grounds to suspect that the assets received with respect to the financial transactions are illegal, or a customer conducting the financial transactions is involved in money laundering activities.
  • Cases where there are any reasonable grounds to suspect that a customer is structuring financial transactions for the purpose of evading the illegal aspects of assets.
  • Cases where the financial institutions have filed reports to the competent law enforcement agencies.
  1. FIs should provide reasonable grounds for their suspicions when filing any reports
  2. FIs should keep the following documents for each report for five years starting from the date of reporting:
    • Records identifying the real name of the customer
    • Records of financial transaction filed
    • Records filed by the financial institutions, which state the reasonable grounds for their suspicions.
  3. When employees working for the financial institutions file reports they should not divulge any related facts
  4. FIs filing reports should not take any responsibilities in the compensation for the damages to the customer whose financial transactions are related to each report, except in cases where a false report have been filed on purpose or due to significant negligence on the part of the financial institutions.
Measures to be implemented by the Financial Institutions
  1. Designation of persons responsible for the reporting and the establishment of an internal reporting system
  2. Preparation and implementation of guidelines to prevent money laundering activities
  3. Educating and training the management and the employees to prevent money laundering activities
 
 Penal Provisions
  1. Persons who fall under each of the followings should be subject to imprisonment of 5 years or less or a fine of 30 million won or less:
    • Persons who, by abusing their official authority, access and/or photocopy the related records kept by the financial institutions or request the heads of the financial institutions the information or records related to financial transactions.
    • Persons who provide to others or divulge specific financial transaction information obtained on duty and information or records or use them for improper purposes, and/or persons who request specific financial transaction information and information or records to use them for improper purposes.
  2. Persons who fall under each of the followings should be subject to imprisonment of 5 years or less or a fine of 5 million won or less:
    • Persons who make false reports
    • Persons who divulge facts to the customers
 
Civil Fine
  1. Persons who fall under the following should be subject to a fine of 5 million won or less:
  • Persons who fail to make reports
  • Persons who refuse to comply with orders, directives, and inspections or who rejects, obstructs or evades them
  • Persons who, on purpose or due to significant negligence provide specific financial transaction information to the institutions other than the competent law enforcement agencies
  1. Persons who refuse to comply with fines imposed can lodge appeals to the Commissioner within 30 days of the notification of such penalty

 

 

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