The Korea Financial Intelligence Unit (KoFIU) held a meeting with financial industry groups on July 20 and introduced measures to strengthen responsibility and professional capacity in financial institutions’ anti-money laundering (AML) duties. The measures have been prepared after having numerous discussions and gathering comments from financial institutions throughout the first half of this year.
First, the proposed measures make the role and responsibility of core AML officers (board of directors, chief executive officer, compliance officer and reporting officer) more reasonable to ensure that their AML duties are performed effectively commensurate with their respective position and responsibility. The role of CEOs has been made more specific to clearly indicate what types of activities constitute the “establishment” and “operation” of a company-wide AML system. Under the current legal framework, there is no specific indication about the role and responsibility of compliance officers regarding their AML activities. Therefore, the measures introduce a supervisory role on compliance officers over their employees. The measures also adjust the reporting officer’s scope of responsibilities more realistically so that they can be made accountable for the areas that can actually come under their supervision.
Second, the proposed measures strengthen the professional capacity and independence of the reporting officer who is in charge of overseeing the company’s AML activities. Financial institutions will need to appoint someone who has at least two years of AML experience. However, considering that there is currently a shortage of AML experts in the market vis-à-vis the number of financial institutions that are required to comply with AML duties, this requirement will apply only to the financial institutions that are legally bound to have a compliance officer as mandated by the Act on Corporate Governance of Financial Companies (“the Act” hereinafter). A grace period of two years and six months will be granted from the day of announcement. In addition, to guarantee a certain level of independence, for banks, reporting officers should have the position of an operating officer. For other types of large financial companies that are bound to appoint a compliance officer mandated by the Act, the reporting officer shall have the position right under the compliance officer.
The KoFIU will revise and announce the rules reflecting opinions of financial institutions in the second half of this year and begin enforcement in the first half of 2024.
* Please refer to the attached file for details.