Sanctions, PEPs, and Targeted Financial Sanctions Compliance
This domain tests targeted financial sanctions and politically exposed person controls, which are often confused. Sanctions require freezing and reporting; PEP status requires enhanced due diligence and senior approval.
Core rules
- Korea implements UN Security Council targeted financial sanctions through domestic law and designations. Institutions must screen customers and transactions, freeze funds or assets without delay, and report matches to the authorities.
- Screening should cover names, aliases, dates of birth, identifiers, and ownership or control links, not just exact-name matches.
- PEPs include domestic and foreign persons entrusted with prominent public functions, plus family members and close associates.
- PEP relationships require senior management approval, source-of-funds and source-of-wealth analysis, and enhanced ongoing monitoring.
- TFS asset freezes apply without prior notice and generally prohibit making funds available to designated persons.
Worked example
A customer's name matches a UN-designated individual but the date of birth differs. The bank should not ignore the match or simply close the alert. It should investigate identifiers, ownership links, and transaction purpose; if the match is confirmed or control is established, freeze and report. If it is a false positive, document the resolution.
Traps
A PEP is not automatically a sanctioned person. Domestic PEPs are not exempt from EDD. A false positive still requires documented analysis. Do not tip off a customer about a sanctions freeze or report.