Over 50 Million Won Transaction Regulated to Report

Most financial organization must report the transactions over 50 million won or 10 thousand dollars that are suspicious of money laundering to the newly established Financial Intelligence Unit (FIU) from this November.

The financial organizations that are found negligent of not reporting will be penalized maximum 5 million won.

The items to be reported will include such transactions as loan, security, insurance, and foreign exchange. The Ministry of Finance and Economy (MFE) will implement such regulations as soon as the `law concerning specific financial transactions` is announced in November.

Bang Young-Min, the head of the FIU Establishment Headquarters, remarked that ``foreign countries obligate the financial organizations to report any transactions that are being suspicious of money laundering without regarding amount. However, since the system is newly introduced to Korea, [FIUEH] set a criterion of 50 million won for a preparatory period.``

The MFE is considering a drastic cut of the standard amount for the report in a few years.

The amount of the foreign exchange was decided as 10,000 dollars, which is the same amount that is to be reported to the National Tax Service and the Korea Customs Service. The criterion for the won transaction was set up relatively high considering the burdens of domestic financial organizations. However, the new line far behind the international standard seems to create controversies.

The enforcement regulation includes all the financial organizations that are mandated by the law in the financial organizations that are obliged to report, such as banks, securities, insurances, investment and trusts, investment banks, credit guarantee fund, technology credit guarantee fund, loan business capitals, new technology investment unions, etc.

The MFE will let the head of the FIU to entrust the right for inspection and audit concerning the reported cases to the related institutions. Consequently, the Financial Supervisory Service will hold the inspection and supervisory rights over banks, securities, and insurance companies, the governor of the Bank of Korea will have rights over foreign exchange business, the Minister of Government Administration and Home Affairs will take charge of the inspection and supervisions over the Saemaul Security Banks, and the Minister of Information and Communication will inspect and supervise the post offices.

The MFE will include the FIU in its organization after negotiating with MGAHA by mid October.

yhchoi65@donga.com