FATF Status

South Korea is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in South Korea was undertaken by in 2020. According to that Evaluation, South Korea was deemed Compliant for 12 and Largely Compliant for 20 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 5 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

South Korea was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

APG Yearly Typologies Report  -  2015

Emerging Trends; Declining Trends; Continuing Trends (INCSR)

Economic crimes such as tax evasion and embezzlement continue to be the most challenging issues. Utilizing tax havens and paper companies to evade tax and illegally moving assets overseas continue to pose problems.

Declining trends are not currently identified by the Korean law enforcement agencies.

Continuing trends include: -

-         tax evasion and utilizing tax havens and paper companies,
-         association of ML with corruption, embezzlement and bribery of state funds,
-         foreigners or individuals associated to foreigners opening accounts in different/multiple banks and
-         funds received were withdrawn in cash and via ATM at various locations immediately upon receipt, leaving low balances in the accounts.​

US Department of State Money Laundering assessment (INCSR)

South Korea was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

The Republic of Korea (South Korea) has an advanced economy that is dominated by large industrial companies. It is not an offshore banking center.  While organized crime does not have a large profile, it is linked to the Japanese yakuza. There also are reports that Korean criminals tried to connect with counterparts in the Chinese triads and Nigerian gangs. Most money laundering in South Korea is associated with domestic criminals, official corruption, and ethnic Koreans living abroad.  Drug smuggling in South Korea has increased in recent years.  In 2015, $174.8 million of banned substances were confiscated, up 42 percent from a year earlier.

South Korean officials have uncovered numerous underground banking systems being used by South Korean nationals, North Korean defectors, and foreign national workers from China and Southeast Asian and Middle Eastern countries. Reports indicate North Korean defectors living in South Korea are remitting more than $10 million per year to family members in North Korea through illegal banking systems between South Korea and China.

Gambling is legal but highly regulated and limited to non-citizens. The country has eight free economic zones (FEZs), with Incheon International Airport wholly incorporated into one of the zones.  While companies operating in FEZs enjoy certain tax and tariff privileges, they are subject to the same general laws on financial transaction reporting as companies operating elsewhere in the country. Korea mandates extensive entrance screening to determine companies’ eligibility to participate in FEZ areas, and firms are subject to standard disclosure rules and criminal laws.

EU Tax Blacklist

South Korea was removed from EU Tax Blacklist on 23 January 2018 following "commitments made at a high political level to remedy EU concerns".

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          63

World Governance Indicator – Control of Corruption             77

Corruption presents moderate risks for businesses operating or planning to invest in South Korea. The Criminal Code criminalizes the main forms of corruption, and the Act on Anti-Corruption and the Establishment and Operation of the Anti-Corruption & Civil Rights Commission includes a Code of Conduct for public-sector employees and regulates conflicts of interest and asset disclosure. The Improper Solicitation and Graft Act eliminates a requirement to provide direct evidence between a monetary reward and a favor to secure a corruption conviction and holds companies liable for their employees’ corrupt misconduct. Anti-corruption legislation is increasingly enforced in South Korea. Facilitation payments are prohibited. Strict limits for hospitality and gift-giving to public officials have come into force. South Koreans recently witnessed the largest corruption case the country has ever seen. Following numerous allegations of corruption and influence peddling, ex-President Park faced impeachment in late 2016 and was, months later, indicted on charges of bribery, abuse of office and other corruption-related offences. The scandal has spread to involve the highest echelons of the conglomerate Samsung as well. For further information - GAN Integrity Business Anti-Corruption Portal

OECD 2018 Report  - Korea must enhance detection and reinforce sanctions to boost foreign bribery enforcement

Read More and Access Report

The Republic of Korea (ROK) offers foreign investors political stability, public safety, world-class infrastructure, a highly skilled workforce, and a dynamic private sector. The economy is sophisticated, globally integrated, and open to foreign investment. Following market liberalization measures in the 1990s, foreign portfolio investment has grown steadily, exceeding 31 percent of the Korea Composite Stock Price Index (KOSPI) total market capitalization as of March 2023.

Despite the size and sophistication of the ROK economy, foreign investors experience challenges from the ROK’s complicated, opaque, and country-specific regulatory framework, even as low-cost producers, most notably China, have eroded the ROK’s competitiveness in the manufacturing sector. A more benign regulatory environment will be crucial to foster innovative technologies that could fail to mature under restrictive regulations that do not align with global standards. The ROK government has taken steps to address regulatory issues over the last decade, notably with the establishment of a Foreign Investment Ombudsman inside the Korea Trade-Investment Promotion Agency (KOTRA) to address the concerns of foreign investors. President Yoon Suk Yeol has pursued a policy of “de-regulation” with the stated aim of better aligning ROK regulations with global standards. In 2019, the ROK government also created a “regulatory sandbox” program to spur creation of new products in the financial services, energy, and tech sectors, adding mobility and biohealth in 2021 and 2022. In 2021, the OECD recommended the ROK National Assembly consider the creation of a permanent legislative regulatory quality mechanism to scrutinize its own legislative actions.

The revised U.S.-Korea Free Trade Agreement (KORUS) entered into force January 1, 2019, and helps secure U.S. investors broad access to the ROK market. Types of investment assets protected under KORUS include equity, debt, concessions, and intellectual property rights. With a few exceptions, U.S. investors are treated the same as ROK investors in the establishment, acquisition, and operation of investments in the ROK. Investors may elect to bring claims against the government for alleged breaches of trade rules under a transparent international arbitration mechanism.

Country Links

Korea Financial Intelligence Unit (KoFIU)

Bank of Korea

Financial Supervisory Service