Korea AML Specialist (TPAC) key terms

Korea's core AML statute, formally the Act on Reporting and Using Specified Financial Transaction Information. It imposes customer due diligence, suspicious transaction reporting, and currency transaction reporting duties on financial institutions and other reporting entities, and establishes the Korea Financial Intelligence Unit.

The national FIU housed within the Financial Services Commission. It receives and analyzes suspicious transaction reports and currency transaction reports, issues AML supervision guidance, and shares financial intelligence with domestic and foreign authorities.

The global AML/CFT standards comprising 40 recommendations covering criminalization, preventive measures, transparency of beneficial ownership, and international cooperation. Korea is assessed against them through mutual evaluation by FATF and the Asia/Pacific Group.

A peer review in which FATF or a regional body such as APG assesses a country's technical compliance with the FATF Recommendations and the effectiveness of its AML/CFT system, producing ratings and follow-up obligations.

The principle that AML/CFT controls should be proportionate to the money laundering and terrorist financing risks identified. Higher-risk customers and products receive enhanced measures, while lower-risk situations may permit simplified measures where the law allows.

The baseline process of identifying each customer, verifying identity using reliable documents or data, identifying beneficial owners, and understanding the purpose and intended nature of the business relationship before or during onboarding.

Additional scrutiny applied to higher-risk relationships such as politically exposed persons, correspondent banking clients, or customers in high-risk jurisdictions. It typically includes source of funds and source of wealth checks and senior management approval.

Reduced verification measures permitted only for customers assessed as low risk under the institution's risk assessment, never for suspected money laundering or for categories the law treats as inherently high risk.

The natural person who ultimately owns or controls a customer or the person on whose behalf a transaction is conducted. Korean rules generally look to ownership thresholds and control through other means, with layered corporate structures traced to the top.

The percentage of equity or voting rights at which a natural person is presumed to be a beneficial owner. Korean AML rules generally use a threshold that requires identification of any individual holding a substantial interest in the legal entity.

A test identifying beneficial owners through actual control rather than ownership percentage, such as the power to appoint directors, direct the business, or exercise dominant influence over a legal arrangement.

A registered holder who holds shares on behalf of another person. Nominee arrangements are a common concealment technique, so institutions must look through them to identify the real beneficial owner.

A legal entity with no substantive business operations or employees, often used to hold assets or move funds while obscuring the individuals behind it. It warrants enhanced scrutiny and tracing of ownership and control.

A person entrusted with prominent public functions, plus their family members and close associates. Korean rules require enhanced due diligence, senior management approval, source of wealth checks, and ongoing monitoring of the relationship.

A family member or close business associate of a politically exposed person. RCAs are treated as PEPs for due diligence purposes because they may be used to channel benefits or conceal the PEP's interest.

Asset freezes and prohibitions on making funds available to designated persons or entities, imposed without delay following UN Security Council or Korean designations. Institutions must screen customers and transactions and report matches.

The automated and manual process of comparing customers, beneficial owners, and transaction parties against sanctions lists and other watchlists, with matches investigated, escalated, and where required reported to authorities.

A screening alert that appears to match a designated person but on review does not. Institutions must document the rationale for clearing it, because excessive false positives erode the effectiveness of sanctions controls.

The technique of comparing customer names against watchlists using transliteration, fuzzy logic, and scoring. Korean names create particular ambiguity through romanization variants and common surnames, so tuning and secondary identifiers matter.

A report filed with the Korea Financial Intelligence Unit when an institution knows, suspects, or has reasonable grounds to suspect that funds are proceeds of crime or related to terrorist financing. Filing is mandatory and must be timely.

The statutory period within which a suspicious transaction report must be submitted to the Korea Financial Intelligence Unit after the institution becomes aware of the suspicion, typically expressed in days under Korean law.

A legal ban on disclosing to the customer or third parties that a suspicious transaction report has been or will be filed, protecting investigations and the safety of reporting institutions and their staff.

A report filed with the Korea Financial Intelligence Unit for cash transactions above a statutory threshold, capturing the parties, amounts, and account details. It is objective and threshold-based rather than suspicion-based.

The monetary amount above which a currency transaction report is required under Korean law. Transactions structured to fall below it are themselves reportable as suspicious activity.

Deliberately splitting transactions into smaller amounts to avoid reporting thresholds or recordkeeping requirements. It is a classic red flag and may itself constitute a criminal offence.

An indicator or pattern that raises suspicion of money laundering or terrorist financing, such as unusual transaction size, rapid fund movement, reluctance to provide identification, or activity inconsistent with the customer's profile.

The continuous review of transactions and account activity against the customer's known profile, business, and risk rating, with periodic updates of due diligence information and escalation of anomalies.

The scoring or categorization of each customer's money laundering and terrorist financing risk based on factors such as country, product, channel, occupation, and ownership structure, which determines the intensity of due diligence applied.

The origin of the specific money involved in a transaction or relationship, such as salary, sale proceeds, or a loan. Evidence may include bank statements, contracts, or tax records.

The origin of the customer's total accumulated wealth, explaining how the overall estate was built. It is broader than source of funds and is central to enhanced due diligence on politically exposed persons.

A digital representation of value that can be traded or transferred electronically and is not a fiat currency or regulated financial product. Korean AML rules impose reporting, due diligence, and travel rule duties on virtual asset service providers.

A business that exchanges, transfers, or safeguards virtual assets for others. In Korea such providers must register with authorities, maintain AML programs, and comply with suspicious transaction and currency transaction reporting obligations.

The requirement that originator and beneficiary information accompany virtual asset transfers between service providers above a threshold, mirroring wire transfer rules so that counterparties can screen and trace the transaction.

The board-approved framework of policies, a designated compliance officer, staff training, and independent testing that a reporting entity must maintain to manage money laundering and terrorist financing risk effectively.

The senior individual responsible for overseeing the institution's AML/CFT program, reporting to senior management and the board, and acting as the point of contact with the Korea Financial Intelligence Unit and supervisors.

A periodic review of the AML/CFT program conducted by an internal audit function or external party free from the compliance function's influence, assessing design and effectiveness and reporting findings to the board.

Mandatory, role-appropriate education that keeps staff aware of AML/CFT obligations, red flags, sanctions requirements, and reporting procedures, with completion tracked and refreshed at defined intervals.

The standard requiring financial institutions to report suspicious transactions to the national FIU, supported by legal protections for reporters and a prohibition on tipping off customers about the report.