Control Needed
Relative to the size of the underground economy in Korea, the customer verification system and information sharing is very weak. Accordingly, a government organization to combat money laundering by evaluating the risks and relevant databases is strongly needed.
Lee Yoon-seok, a researcher at the Korea Institute of Finance, pointed out at an anti-money laundering symposium by citizens, government and academia, “In Korea, the underground economy accounts for 27.6 percent relative to the Gross Domestic Product (GDP), which is quite bigger than the OECD average [17.6 percent]. However, Korea is very vulnerable to money laundering, as the customer verification process is weak. Actual owners of money are not properly checked or verified.”
According to Researcher Lee, the main reasons for this vulnerability are that anti-money laundering laws are not applied to non-financial sector employees, information is not shared among law enforcement organizations, and limited information disclosure on money laundering inside financial institutions and enhanced customer verification processes are not applied to major government figures.
Therefore, financial authorities plan to expand targets for money laundering risk tests and impose strict punishments on money laundering.
Lee Hae-san, president of the Finance Intelligence Unit (FIU) said, “In case of money laundering, the so-called balloon effect appears in which money laundering moves to areas with relatively weaker surveillance. This is why all the financial sectors need to strictly follow anti-money laundering policies. Anti-money laundering surveillance tests, which have been focusing on commercial banks, will target the second tier financial institutions as well.” President Lee added, “Stronger punishment will be imposed when financial institutions or their executives intentionally violate anti-money laundering laws.”