Money laundering can earn 5-year term

Starting January next year, those accused of money laundering will be punishable by up to five years in prison and a maximum fine of 30 million won.

The financial institutions and foreign currency exchange brokers also will be required to report any suspicious transactions to the Financial Intelligence Unit, a branch of the Ministry of Finance and Economy. Should they purposely fail to do so, the clerk and the manager of the suspicious account could be sentenced to two years imprisonment and a fine of up to 10 million won.

In anticipation of the second phase of foreign currency liberalization slated for next year, the Ministry of Finance and Economy has revealed that it will submit a proposal to the National Assembly for the adoption of bills for the regulation and penalties for illegal profiteering and concealment and mandatory reporting and usage of specific financial transactions.

According to the proposed bills, 80 crimes punishable with a maximum five years of imprisonment include organized crime activity, illegal casinos, forced prostitution, tax evasion, bribery and excessive capital flight. Those found guilty of receiving funds for money laundering also will be punished with a maximum three-year imprisonment and up to 20 million won fine.

However, as the current proposal has excluded the illegal political slush funds from being targeted due to the fear of a government backlash, many observers predict a hot debate to ensue.

"Considering the political neutrality of the FIU and the international standards on such matters, it will be unsuitable to include laundering of the political slush funds as a crime in the current proposal," a source at the Ministry of Finance and Economy said. "However, contribution to the political slush fund that mandates compensation falls under the bribery category."

The FIU will include various experts from the National Tax Agency and the Financial Supervisory Committee and will analyze the various sources of information from the mandatory reports submitted by the domestic financial institutions and those submitted by foreign FIU organizations. Should any illegal activity be suspected, the FIU will report it to the proper authorities.