AML/CFT: Special Act, Customer Due Diligence, and Suspicious Transaction Reporting
This domain tests the Special Act on Reporting and Using Specified Financial Transaction Information, focusing on CDD, enhanced measures, and reporting to KoFIU.
Customer due diligence
Identify the customer, verify identity, identify the beneficial owner, and understand the purpose and intended nature of the relationship. Conduct ongoing monitoring and apply enhanced due diligence to politically exposed persons, high-risk jurisdictions, and unusual correspondent relationships. A foreign branch may use group AML systems, but Korean CDD and reporting standards prevail.
STR and CTR
Suspicious transaction reports have no minimum threshold and must be made without delay to KoFIU when the branch knows or suspects money laundering or terrorist financing. Do not tip off the customer. Cash transaction reports cover cash transactions at or above 20 million won, including linked transactions. Structuring to avoid the threshold is itself suspicious.
Worked example
A customer makes repeated cash deposits of 19.5 million won, asks for split receipts, and explains that he wants to stay “under the reporting line.” This is structuring. The branch should file an STR, assess whether to continue the relationship, and document the decision. Filing no CTR because no single deposit reached 20 million won is not enough.
Traps
Thinking STRs apply only to completed transactions; tipping off; relying on the parent’s AML system without local reporting; failing to identify the beneficial owner; ignoring linked transactions.