Money laundering

Criminal enforcement

Which government entities enforce your jurisdiction’s money laundering laws?

Articles 3 and 4 of the Act on Regulation and Punishment of Criminal Proceeds Concealment (the Criminal Proceeds Regulation Act) and articles 7, 8 and 11 of the Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics, Etc (the Special Act on Narcotics Illegal Trafficking) prescribe money laundering in certain specified crimes and narcotics-related crimes as a criminal offence. If there is any allegation, the prosecution (which does not have a federal versus local distinction in South Korea) proceeds with investigation.

Defendants

Can both natural and legal persons be prosecuted for money laundering?

Under article 7 of the Criminal Proceeds Regulation Act and article 18(1) of the Special Act on Narcotics Illegal Trafficking, when the representative of a corporation, or an agent or employer of, or any other person employed by, a corporation or an individual commits money laundering in connection with the business affairs of the corporation or individual, not only the offender but also the corporation or individual is punished by a fine under the relevant provisions. However, the foregoing rule does not apply where the corporation or individual has not been negligent in giving due attention and supervision concerning the relevant business affairs to prevent such an offence.

The offence of money laundering

What constitutes money laundering?

Under article 2 of the Act on Reporting and Using Specified Financial Transaction Information, the following actions constitute offences of money laundering:

  • concealment and disguise of criminal proceeds (article 3 of the Criminal Proceeds Regulation Act), and any attempt, preparation or conspiracy of the following actions is also penalised:
    • disguise of the acquisition or disposition of criminal proceeds;
    • disguise of the origin of criminal proceeds; or
    • concealment of criminal proceeds for the purpose of encouraging specific crimes or the disguise of criminal proceeds as being legitimately acquired;
  • article 7 of the Special Act on Narcotics Illegal Trafficking also criminalises concealment and disguise of illegal profits similar to the above; and
  • disguise of the fact of acquisition and disposition of assets or their origin, or concealing such assets for the purpose of committing crimes under article 3 of the Punishment of Tax Offences Act or article 270 of the Customs Act, or for the purpose of evading taxes payable under tax-related legislation.

 

For each of the above offences, the required state of mind is an intention to commit the action.

Qualifying assets and transactions

Is there any limitation on the types of assets or transactions that can form the basis of a money laundering offence?

Korean law does not impose any limitation or threshold to qualify money laundering.

Predicate offences

Generally, what constitute predicate offences?

Article 2 and the Annex Table to the Criminal Proceeds Regulation Act set forth a complete list of predicate offences, such as certain offences under the:

  • Criminal Act (eg, organisation of and admission to criminal groups, bribery, homicide, interference with business, coercion, injury or murder of a hostage, larceny, robbery, fraud and embezzlement, and breach of trust);
  • Bicycle and Motorboat Racing Act (eg, unlicensed racing business and interference with racing);
  • Customs Act (eg, smuggling);
  • Foreign Trade Act (eg, manipulation of the export and import price of goods);
  • Attorney-at-Law Act (eg, the crime of receiving money or other benefits under the pretext of soliciting a public official handling a case or an affair for favours in connection with the case or affair);
  • Illegal Check Control Act (eg, forging or counterfeiting cheques);
  • Act on Special Cases Concerning Regulation and Punishment of Speculative Acts, Etc (eg, operation of speculative businesses uncontrolled by law);
  • Commercial Act (eg, special misappropriation by directors);
  • Copyright Act (eg, infringement on trademark rights);
  • Financial Investment Services and Capital Markets Act (eg, use of material non-public information and manipulation of market price);
  • Child Welfare Act (eg, child trafficking); and
  • Specialised Credit Finance Business Act (eg, forging or falsification of credit cards and the use of forged or falsified credit cards).

 

Furthermore, narcotics crimes within the meaning of the Special Act on Narcotics Illegal Trafficking also constitute predicate offences (article 2(2) of the Special Act on Narcotics Illegal Trafficking).

Generally, criminal infringements of laws of other jurisdictions (eg, foreign jurisdictions) cannot per se serve as predicate offences. However, crimes submitted to the International Criminal Court in accordance with the Rome Statute of the International Criminal Court may serve as predicate offences if they fall under any of the crimes set forth in articles 8 to 16 of the Act on Punishment, Etc of Crimes under Jurisdiction of the International Criminal Court (eg, genocide and war crimes).

Violation of tax or currency exchange laws, such as the crime of moving property to a foreign country under article 4 of the Specific Economic Crime Aggravated Punishment Act, the crime of smuggling under article 269 and the attempted crime of smuggling under article 271(2) of the Customs Act, and the crime of manipulation of the export and import price of goods under article 53(2)(ix) of the Foreign Trade Act can also serve as predicate offences.

Defences

Are there any codified or common law defences to charges of money laundering?

There is no codified or common law defence to charges of money laundering. In connection with criminal offences, defences such as a lack of intention, self-defence, justifiable act, urgent refuge and victim’s consent are generally acknowledged; however, these defences would be unlikely to be recognised for money laundering owing to its nature.

Resolutions and sanctions

What is the range of outcomes in criminal money laundering cases?

Under the Criminal Proceeds Regulation Act, money laundering offenders and those who attempt money laundering are punished by imprisonment with labour for not more than five years or by a fine not exceeding 30 million won. A person who prepares or conspires for the purpose of committing money laundering will be punished by imprisonment with labour for not more than two years or by a fine not exceeding 10 million won. In addition, when the representative of a corporation, or an agent or employer of or any other person employed by, a corporation or an individual commits money laundering, the corporation or individual will be punished by the same fine to the extent that that corporation or individual fails to demonstrate the fulfilment of the supervision obligation.

Under the Criminal Procedure Act, plea agreements, settlement agreements or other similar programmes are not acceptable.

Forfeiture

Describe any related asset freezing, forfeiture, disgorgement and victim compensation laws.

Related asset freezing

Under the Criminal Proceeds Regulation Act, when criminal proceeds related to money laundering are subject to potential confiscation or collection by the authorities, the court may grant an order of preservation for confiscation or an order of preservation for collection with respect to those criminal proceeds, either prior to or after indictment, by its decision following the prosecution’s motion or by its ex officio decision. Upon such order, the relevant properties may not be disposed of. If the court later grants the order of confiscation or collection, the proceeds under preservation must be confiscated or collected.

Forfeiture

The Criminal Proceeds Regulation Act stipulates that criminal proceeds, any property derived from criminal proceeds, criminal proceeds related to concealment and acceptance of criminal proceeds and any property generated by such criminal act or acquired in return for such criminal act may be confiscated.

Disgorgement

The Criminal Proceeds Regulation Act states that when a property to be confiscated cannot be confiscated owing to its nature, etc, an amount equivalent to the value of the property may be collected.

Victim compensation law

Victims may file a complaint for civil damages in accordance with the civil law.

Limitation periods on money laundering prosecutions

What are the limitation periods governing money laundering prosecutions?

The limitation period of a money laundering offence is seven years from the date on which the money laundering offence ends. However, when a criminal stays in a country other than South Korea for the purpose of evading criminal penalties, his or her limitation period ceases during such period of stay.

Extraterritorial reach of money laundering law

Do the money laundering laws applicable in your jurisdiction have extraterritorial reach?

Under the territorial principle, any offender will be penalised for his or her crime in South Korea regardless of whether the offender is a citizen or non-citizen. Also, the Criminal Proceeds Concealment Act states that it applies to a Korean citizen who engages in money laundering outside the territory of South Korea.