Korea: Lawyers, Accountants Will Be Obliged to Report Money Laundering

The Korean government plans to introduce a rule under which lawyers and accountants will be obliged to report when their customers are suspected of having committed money laundering.

The Financial Services Commission (FSC) made public its plan to expand the reporting obligations to non-financial professionals during the parliamentary inspection of the commission, Monday.

But the rule may trigger a conflict of interest if lawyers and accountants must inform on the wrongdoings of their clients, analysts said.

Currently, only casinos and financial companies such as banks and brokerage houses have had to report transactions of more than 20 million won suspected of involvement in money laundering to the Korea Financial Intelligence Unit (KFIU).

The failure to do so or any false reports constitute criminal offences. Violators of the regulations may be subject to a maximum of 30 million won in fines or five years in jail.

"In order to meet the requirement, we will expand the rule to include attorneys and accountants," an FSC official said.

"The plan will be introduced in phases. At first, we will advise the non-financial professionals to voluntarily report the suspicious deals. Later on, it will be legislated," he said.

In addition, the FSC is looking to reduce the lower limit of 20 million won for the reporting obligations to 5 million won in the near future.

This year, up to 100,000 cases of suspicious money laundering were reported to the KFIU, compared with 85,624 last year. The number is expected to reach 130,000 this year.

The number stood at 13,459 in 2005 but surged to 24,149 in 2006 and 52,474 in 2007 before surpassing the 100,000 mark this year.

The reports came mostly from banks, out of approximately 5,800 financial companies and 17 casinos. Since last December, just two casino operators reported 11 suspicious cases.

In the meantime, Korea hopes to become the 35th member nation of the Financial Action Task Force on Money Laundering (FATF), at the general meeting of the Paris-based organization Wednesday, which will take place in the French capital.

The FATF is an international organization, whose purpose is the development and promotion of policies to grapple with money laundering and terrorist financing locally and globally.

Up until now, the country's financial outfits, particularly small-sized ones, have faced some difficulties because it was not a member of the FATF.

Source: Korea Times