Korea AML Specialist (TPAC) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

KoFIU

Korea Financial Intelligence Unit, housed within the Financial Services Commission; receives STR and CTR filings, issues AML supervision standards, and exchanges information with foreign FIUs.

Specific Financial Information Act

Korean statute (특정금융정보법) that imposes STR and CTR reporting, CDD, recordkeeping, and tipping-off prohibitions on financial institutions, and extends obligations to virtual asset service providers.

Tipping-off prohibition

A financial institution must not disclose to the customer or any third party that a suspicious transaction report was or will be filed; breach carries criminal liability under the FIU Act.

AML compliance officer

Designated person responsible for the institution's AML program, independent of revenue functions, whose appointment is reported to KoFIU and who decides on STR filings.

FATF Recommendation 1

Requires a risk-based approach: institutions identify, assess, and mitigate ML/TF risk, applying enhanced measures for higher risk and permitting simplified measures only for demonstrably lower risk.

Travel rule

Requirement that originator and beneficiary information accompany wire transfers and, in Korea, virtual asset transfers of KRW 1 million or more between service providers.

Egmont Group

Global network of financial intelligence units that enables secure FIU-to-FIU exchange of information, including spontaneous and requested disclosures, supporting cross-border investigations.

Mutual evaluation

Peer assessment by FATF or a regional body such as APG that rates technical compliance with the 40 Recommendations and effectiveness against immediate outcomes.

CDD triggers

Events requiring customer due diligence: establishing a relationship, occasional transactions above the threshold, suspicion of ML/TF, or doubts about previously collected identification data.

Enhanced due diligence

Additional measures for higher-risk customers, including source of funds and wealth verification, senior management approval, deeper monitoring, and refusal or exit where risk cannot be mitigated.

Simplified due diligence

Reduced measures allowed only for demonstrably lower-risk cases such as listed companies subject to disclosure; identification of the customer is never waived.

Source of wealth

Explanation and evidence of how the customer's overall wealth was accumulated, distinct from source of funds, which explains the origin of specific funds in a transaction.

Beneficial owner threshold

Natural person owning or controlling 25 percent or more of shares or voting rights, or exercising ultimate effective control by other means such as nominee arrangements.

Trust beneficial owner

Includes the settlor, trustee, protector if any, beneficiaries or class of beneficiaries, and any other natural person exercising ultimate control over the trust.

Customer risk rating

Composite score combining customer attributes, geography, product or service, channel, and transaction behavior, documented and refreshed on trigger events and at set intervals.

Institutional risk assessment

Enterprise-wide documented evaluation of ML/TF risk across customer base, products, delivery channels, and geography, updated periodically and approved by senior management.

STR filing duty

Obligation to report to KoFIU without delay when an institution knows or suspects funds are criminal proceeds or linked to terrorism financing, with no minimum amount.

STR narrative quality

A defensible report states who, what, when, how much, why the activity is suspicious, and what action the institution took, including any account restriction.

Alert triage

Documented process of reviewing monitoring alerts, closing false positives with rationale, and escalating genuine matches to investigation and AML officer decision.

CTR threshold

Cash transactions of KRW 10 million or more, single or aggregated within one business day for the same person, must be reported to KoFIU within the prescribed period.

Structuring

Splitting cash transactions to stay below reporting thresholds; it is a red flag and may itself constitute an offense, requiring a suspicious transaction report.

CTR versus STR

Separate obligations: a currency transaction report is threshold-based and automatic, while a suspicious transaction report is suspicion-based and required at any amount.

Targeted financial sanctions

Obligation to freeze designated persons' funds without delay and without prior notice, and to prohibit making funds or economic resources available to them.

PEP definition

Individual entrusted with prominent public functions domestically or abroad, plus family members and close associates; risk continues at least 12 months after leaving office.

Retrospective screening

Re-screening the existing customer and counterparty base whenever sanctions lists are updated, to identify newly designated persons and freeze assets promptly.

False positive disposition

Documented resolution of a screening hit by comparing name, date of birth, nationality, and identifiers; unresolved matches are escalated and treated as confirmed.

Three lines of defense

Business units own customer risk, compliance designs and monitors controls, and internal audit provides independent assurance to the board or audit committee.

Independent testing

Periodic AML audit by a function independent of AML operations, covering CDD sampling, STR quality, sanctions screening, and CTR accuracy, with tracked remediation.

Role-based training

Training tailored to job function and risk exposure, delivered at least annually and on regulatory change, with completion tracked and reported to management.

VASP registration

Korean requirement for virtual asset service providers to register with KoFIU, hold ISMS certification, and use verified real-name bank accounts before operating.

Unhosted wallet risk

Self-custodied wallets lack a regulated counterparty, so institutions apply enhanced measures such as ownership verification and source of funds checks on transfers.

New product AML sign-off

Requirement that AML risk assessment and control design be approved before launching new products, channels, or technologies, with the assessment refreshed afterward.