Anti Money Laundering Measures in Korea (1)
‘Criminalization of Money Laundering’
Policy measures can be enforced when legislated under the related act. Anti money laundering measures are not an exception, as it came into effect with the implementation of ‘Act on Reporting and Use of Certain Financial Transaction Information’ in 2001.
Anti money laundering measures can be divided into four parts; 1) Criminalization of Money Laundering, 2) Suspicious Transaction Report (STR), 3) Currency Transaction Reporting System, and 4) Customer Due Diligence.
As I am listing up these sections of the Act, you probably begin to think that, “this blog post is a big headache. I won’t read it”. But, please do not scroll down or exit this page yet. I will explain in a very plain language, which will surely make sense. If you get to know the parts of anti money laundering measures, you would find it even more interesting when you are watching some movies and news related to this issue.
Today, I will introduce you the first measure, ‘Criminalization of Money Laundering’.
Despite its big name scaring you, the core idea of this is about making it a law to punish money laundry offences. For the punishment, there should have been predicate offences beforehand. This means that the money engaged in laundry should be an illegally acquired one. In other words, to establish the criminalization of money laundering, the offence should be derived from a previous offence providing an illegal source of money flow.
Then, why do we criminalize the offence rather than punish it under the civil law? The primary purpose of criminalization is to get rid of fundamental causes encouraging offences in the economy. Otherwise, criminals would obtain enormous profits through unlawful ways, while government bodies, financial sectors, industries and individuals seeking lawful justice might suffer from losses. Ultimately, national stability and security can be threatened without proper measures dealing with anti money laundering.
In international society, it is widely perceived that legal enforcement and punishment is the most effective measure against money laundry. This perception is suggested and recommend by the UN and FAFT.
I hope that my post is not too hard or boring for you to read. The core idea of this act is not just limited to this specific area in finance, but considered an international norm shared in the current era. I will bring the other parts of the Act in my next post!