Criminal asset recovery – legal framework
Confiscation – legal frameworkDescribe the legal framework in relation to confiscation of the proceeds of crime, including how the benefit figure is calculated.
The Criminal Act (article 48) and the Criminal Proceeds Act (articles 8 to 10) provide the general framework for confiscation of the proceeds of crime, as well as properties, equipment and instrumentalities used or planned to be used in corruption offences, with due protection of the rights of bona fide third parties. Additionally, there are confiscation provisions in the Criminal Proceeds Act (articles 3 to 6) and the Act on Special Cases Concerning Confiscation on Offences of Public Officials (articles 3 to 6). Criminal proceeds include income derived from such proceeds. Value-based confiscation is also possible. The value of the property is determined by the court based on the prosecution’s evidence.
The laws above, together with the Act on Reporting and Use of Certain Financial Transaction Information, address the identification, freezing or seizure of criminal proceeds and instrumentalities.
Criminal asset recovery – confiscation
Secondary proceedsIs confiscation of secondary proceeds possible?
Yes. Several Korean laws, including the Act on Special Cases Concerning Confiscation on Offences of Public Officials and the Criminal Proceeds Act, provide prosecution with the authority to confiscate secondary proceeds.
Third-party ownershipIs it possible to confiscate property acquired by a third party or close relatives?
Yes. Several Korean laws, including the Criminal Law (article 48) and the Criminal Proceeds Act, provide that the proceeds of crime transferred to a third party may be confiscated if the third party knew of the crime at the time of acquisition. On a separate note, a person who conceals, destroys, damages, fraudulently transfers or encumbers his or her property, for the purpose of evading execution, thereby causing a loss to one’s creditor, may be punishable under the Criminal Law (article 327).
ExpensesCan the costs of tracing and confiscating assets be recovered by a relevant state agency?
Yes. When confiscating from the criminal perspective, the person upon whom a judicial decision is being executed must bear the execution costs under article 493 of the Criminal Procedure Act. Such costs must be paid concurrently with the execution. Thus, costs arising from asset recovery and confiscation must first be paid out of the asset that is being confiscated. However, costs arising from asset tracing, other than those arising from legal procedures, constitute investigation expenses.
Value-based confiscationIs value-based confiscation allowed? If yes, how is the value assessment made?
Yes. If the exact property cannot be confiscated, the value of the property will be subject to confiscation. The value of the property will be determined by the court based on the prosecution’s evidence.
Burden of proofOn whom is the burden of proof in a procedure to confiscate the proceeds of crime? Can the burden be reversed?
As a general matter, the burden of proof is on the prosecution. Under the Criminal Act and Criminal Procedure Act, no provision alleviates the burden of proof regarding confiscation in general. However, certain special acts have provisions on the burden of proof regarding the calculating or proving of illegal profits or assets.
Using confiscated property to settle claimsMay confiscated property be used in satisfaction of civil claims for damages or compensation from a claim arising from the conviction?
Yes, partially. Under relevant laws, the property of the victim of a predicate offence, which has been confiscated or an equivalent value of which has been collected, must be returned to the victim (eg, article 333 of the Criminal Procedure Act).
Confiscation of profitsIs it possible to recover the financial advantage or profit obtained through the commission of criminal offences?
Yes. Particularly under relevant laws on redemption of the proceeds of crime, the scope of assets that could be confiscated or redeemed is extensive, which allows for confiscating secondary proceeds derived from the proceeds of crimes. Article 48 of the Criminal Act prescribes that only a thing that has been used or was sought to be used in the commission of a crime, produced by or acquired by means of criminal conduct, and received in exchange for such a thing can be subject to confiscation. However, various statutes extend the scope of confiscation to include proceeds of crime or assets obtained as fruits to such proceeds.
Non-conviction based forfeitureCan the proceeds of crime be confiscated without a conviction? Describe how the system works and any legal challenges to in rem confiscation.
Article 48 of the Criminal Act provides for confiscation of a thing (in whole or in part) used or sought to be used in the commission of a crime, produced by or acquired by means of criminal conduct, and received in exchange for such a thing. Article 49 provides for confiscation even when a conviction has not been achieved when the requisites of confiscation in article 48 have been met.
Management of assetsAfter the seizure of the assets, how are they managed, and by whom? How does the managing authority deal with the hidden cost of management of the assets? Can the assets be utilised by the managing authority or a government agency as their own?
In principle, the prosecution manages confiscated assets. However, upon the transfer of ownership rights to the government, the assets become government property, and the Korea Asset Management Corporation manages such assets under the supervision of the Ministry of Strategy and Finance. Once the assets become national property, no more taxes or maintenance costs arise. The duty of the Korea Asset Management Corporation is to sell the obtained personal and real properties, and it may lease them until sold.