AML, Terrorist Financing and Sanctions Compliance
What this domain tests
Obligations under the Act on Reporting and Using Specified Financial Transaction Information (특정금융정보법), KoFIU reporting, and sanctions screening - tested through insurance-specific typologies such as single-premium policies, third-party payers and early surrenders.
Core rules
- CDD at onboarding and at defined trigger events; EDD for high-risk customers, PEPs and cross-border correspondent relationships. 실제소유자 (beneficial owner) identification applies at a 25% ownership threshold, with a control-based fallback.
- STRs go to KoFIU without delay - there is no minimum amount - and tipping off the customer is prohibited. CTRs cover cash transactions of KRW 20 million or more.
- Records must be retained for five years after the relationship ends or the transaction is completed.
- Sanctions: UN Security Council designations and 외교부 designations require asset freezing without prior notice, plus screening at onboarding, on every payment, and on list updates.
Worked example
A corporate client takes out a large single-premium policy, then within two months changes the beneficiary to an entity registered in a jurisdiction adjacent to a sanctioned state and requests early surrender with remittance to a third-party account. Indicators: third-party payment, unexplained beneficiary change, surrender to a different account, sanctions nexus. The correct handling is to freeze and report the attempted transaction, file an STR without delay, and make no disclosure to the client.
Traps that cost marks
- Waiting for a threshold before filing an STR; only CTRs have a monetary trigger.
- Screening the policyholder but not the beneficiary, payer or payee.
- Relying solely on the parent's screening list or home-country sanctions regime.