Money launderers will face jail terms of up to five years

Starting next month, a financial institution discovering a transaction suspected to be illicit will be required to report it to the Financial Intelligence Unit (FIU) under the control of the government. Also, if officials of the FIU and other investigative institutions are found to have used financial information they obtained while performing their duties for other purposes, they will be sentenced to a prison term of up to five years or to pay fines of up to 30 million won.

The government hosted a Cabinet meeting presided over by President Kim Dae-Jung at Chong Wa Dae Tuesday and voted for bills regulating and punishing the cover-up of criminal income to prevent money laundering and on reporting and using financial transaction information. The bills will be presented to a regular session of the National Assembly.

Kim Gyu-Bok, an official of the Finance and Economy Ministry (MOFE), who heads a team establishing the FIU, said that the size of transactions that financial institutions are required to report will be limited over a certain level. He added that the specific amount will be determined later in consideration of the situation of cash transactions and financial institutions.

The bills specify punishments for 36 kinds of crimes, including professional and repeated offenses by criminal groups, economic crimes involving large sums of money, tax evasions and embezzlement by employees of financial institutions and bribery cases involving government officials. If found to be illicit, all funds will be confiscated.

In addition, anyone receiving money knowing that it is illicit will face a jail term of up to three years or fines of up to 20 million won.

The government decided to provide information on certain financial transactions to the National Police Agency as well as the National Tax Service, the National Customs Service, the Financial Supervisory Committee and the Public Prosecutor General. However, it excluded cases of violating the law on political funds from the list of specific crimes to prevent the FIU from being used for political purposes.

The MOFE said that the National Tax Service and the National Customs Service will be notified of foreign exchange transactions exceeding US$10,000, but decided not to report won-based transactions involving large sums of money due to possible side effects.