International AML/CFT Standards and Cross-Border Obligations
This domain tests whether you can connect FATF and UN obligations to concrete Korean cross-border controls. Korea is a FATF member and is assessed through the FATF/APG mutual evaluation process; the 40 Recommendations are implemented through Korean law rather than applied directly. The SFIA, the terrorism-financing/WMD act, foreign exchange rules, and customs rules translate international standards into duties for financial institutions.
Core rules
- Risk-based approach: higher-risk countries, customers, products, and delivery channels require enhanced measures.
- Wire transfers must carry accurate originator and beneficiary information; missing information triggers requests, rejection, or escalation under the Travel Rule.
- Correspondent banking requires counterparty due diligence, sanctions screening, and understanding of the respondent's AML controls.
- Travelers carrying cash or negotiable instruments above the USD 10,000 equivalent must declare to customs.
- Korea participates in automatic exchange of financial account information under CRS and FATCA, supporting cross-border tax transparency.
Worked example
A Korean bank receives a USD wire from a customer in a jurisdiction with weak AML supervision. The originator field is incomplete and the amount is unusual for the customer. The bank should not simply credit and move on. It should request complete wire information, screen both parties against sanctions lists, apply enhanced due diligence, and consider an STR if the explanation is unsatisfactory.
Traps
FATF Recommendations are not self-executing; cite the Korean implementing rule. The cash declaration threshold is USD 10,000 equivalent, not KRW 10 million. A correspondent relationship does not transfer all AML responsibility to the respondent bank.