Download Suspected Illegal Money Deals Increase 2.5-Fold

Suspected Illegal Money Deals Increase 2.5-Fold
The Korea Times
By Lee, Hyo-sik
July 22, 2005
The number of suspected illicit financial transactions, including money laundering, reported
to the Financial Intelligence Unit (FIU) jumped two and a half times this year compared to
the same period last year.
Financial companies reported 4,949 cases of unlawful financial transactions in the first six
months of this year. The FIU, an umbrella organization of the Ministry of Finance and
Economy, said yesterday that the increase could have been prompted by strengthened
punitive actions, including fines of up to five million won ($4,800) per case.
The sharp rise in illegal financial transactions may also reflect a new regulation instituted
late last year, which reduced the amount of money involved in suspected illegal activities
that banks, securities firms, insurers and mutual banks must report.
Most of the illicit deals are to launder money illegally obtained through drug trafficking,
bribes and other criminal deals, it said.
The money laundering law now requires financial institutions to report any suspected cases
of unlawful money laundering or fundraising worth more than 20 million, down from the
previous 50 million won. Banks and other financial institutions now have to monitor a larger
number of financial transactions for possible illegalities.
The FIU previously received a total of 6,699 illegal cases in the financial sector from 2002
through 2004: 4,680 in 2004; 1,744 in 2003; and 275 in 2002.
Of the total, 1,197 cases were reported to other government agencies such as the Financial
Supervisory Commission, the National Tax Service (NTS) and the Prosecutors’ Office for
further examination.
Illegal financial transactions include disguised overseas remittances or using others people’s
accounts to send more than $10,000 abroad without reporting it to regulators, the FIU said.
Local residents are required by the foreign exchange transaction law to fill out a bank form
when sending money overseas and the banks are obliged to report all transactions
amounting to $10,000 per year to the NTS.
Some individuals try to bypass domestic banks and not report transactions to authorities by
arranging currency trade deals with brokers working in Korea and foreign countries.
They deposit Korean won in brokers’ bank accounts here and receive the equivalent in
foreign currency when they travel abroad.
Some owners of domestic firms attempt to use company funds for private purposes by
inflating business expenses and subsequently launder the fund through a series of banking
transactions.
The FIU expects to receive more financial transaction reports next year as the money
laundering law will be reinforced to oblige financial services companies to report all dealings
involving over 50 million won even though they are not suspected of any illegality.
The agency is working to develop a computerized system that can more efficiently process a
large number of reports on various financial transactions.