Anti Money Laundry and Financial Intelligence Unit (5)

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Anti Money Laundering Measures in Korea (3)

‘Customer Due Diligence’

 

Hello, our blog readers. Following the previous posts talking about ‘criminalization’ and ‘reporting’ measures for anti money laundering, this post is about ‘customer due diligence’.

 

Before criminalizing or reporting money laundering activities, what can be done to prevent money laundry? ‘Customer Due Diligence’ is regarded as a pre-emptive measure, before money laundry takes a place.

When a financial company suspects its customer of money laundry, a company should check the details of the customer. Other than the name and personal identification number, his/her residential address and contact details should be checked. By taking a reasonable care, a financial company can prevent its provision of services from being used for money laundry.

This check-up measure is also called ‘Know Your Customer Policy’. Differentiating customers from criminals makes it possible for financial companies to minimize risks of money laundry as well as not to ruin their reputation and reliability in financial system.

 

For a stricter measure, there is ‘Enhanced Due Diligence’. If a certain customer or financial product is found to be more risky, a financial company can check the details in a stricter way. This risk-based approach seeks more effectiveness within anti money laundering measures. When taking enhanced due diligence, a financial company should follow the guidelines by FIU.

So, next time, if the financial company that you are making transactions asks your personal details, please do not feel intimidated or annoyed. This is financial companies’ obligations against possible risks of money laundering activities.

Anti money laundering measures are all covered now; 1) Criminalization of Money Laundering, 2) Suspicious Transaction Report (STR), 3) Currency Transaction Reporting System, and 4) Customer Due Diligence. All these measures are complementing each other, establishing an effective and coherent system. By now, you may acknowledge that anti money laundry measure is not just a sudden attack through investigation as often described in Hollywood movies. Indeed, every single effort and step are required to build a financial system free from money laundering activities.

Regards,
Frank

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