Must-read if you want to avoid punishment for violating Korea’s Anti-Money Laundering Law
Why anti–money laundering (AML) cases become a problem
The Act on Reporting and Using Specified Financial Transaction Information (the “Specified Financial Information Act,” often called the AML Act) is a core law aimed at preventing money laundering (AML) by regulating money-laundering activities and the financing of public-intimidation/terroristic acts through financial transactions.
This law is not so much a statute that directly punishes the act of money laundering itself; rather, it focuses on regulating the financial transaction order through measures intended to prevent money laundering—such as reporting obligations for financial institutions, customer due diligence (KYC) obligations, and reporting/registration obligations for virtual asset service providers (VASPs).
Because of this, cases repeatedly arise in which a person becomes a target of investigation for alleged AML law violations even though they did not directly commit a crime, simply because they failed to exercise sufficient caution regarding the source of funds or the structure of the transaction.
Recently, in practice, issues often arise in situations involving virtual asset (crypto) transactions, movement of funds using corporate accounts, and intermediary/relay structures involving third parties.
Even if a transaction appears normal on the surface, legal risk can arise if the origin and flow of funds are not clear.
In what situations can you become implicated in a violation of the AML law?
Violations of the Specified Financial Information Act are intent crimes, meaning punishment requires proof of intent.
However, intent includes not only direct intent, but also dolus eventualis (reckless/conditional intent). If a person recognizes the possibility that the criminal result may occur and internally accepts that risk, intent may be found.
This is determined not only by the actor’s statements, but by a comprehensive evaluation of specific circumstances, including the external form of conduct and the situation.
Lending your financial account to another person or providing an access medium (e.g., authentication tools) may constitute a violation of the Electronic Financial Transactions Act (Article 49(4) of that Act).
In addition, if you assist someone in conducting financial transactions under another person’s real name for the purpose of an evasive or unlawful act, you may be liable as an aider for a violation of the Act on Real Name Financial Transactions and Confidentiality (Financial Real-Name Act) (Article 6(1) and Article 3(3) of that Act).
However, under the Financial Real-Name Act, an “evasive/unlawful act” must rise to a level comparable to the concealment of illegal assets, money laundering, financing of public-intimidation/terroristic acts, or evasion of compulsory execution.
There is case law holding that simply being used as an account to receive fraud proceeds from electronic financial fraud is, by itself, difficult to regard as an “evasive/unlawful act” (Incheon District Court, Feb. 11, 2022, Decision 2021No3685).
That said, in practice, there have been many cases where something appeared to be a normal investment settlement or payment for services, but was judged to be a channel for transferring illegal funds, triggering an investigation.
In particular, when repeat transactions, large amounts, and a complex transaction structure are intertwined, criminal suspicion becomes much stronger.
Key response points you must consider if you become implicated
Money-laundering-related crimes punish not only principal offenders but also aiders and abettors. Therefore, even if you did not directly obtain or store criminal proceeds, you may be punished as an accomplice if you engaged in conduct that facilitated money laundering.
For aiding/abetting liability to be established, the principal’s crime must satisfy the statutory elements and be unlawful, and the aider must have intent to assist along with awareness that the principal’s conduct constitutes an act meeting the elements of the offense.
However, in AML cases, what matters more than whether you committed a formal act is how you were involved in the flow of funds and whether you could have recognized what was happening.
In practice, factors like the following are reviewed comprehensively:
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Whether you committed specific acts that constitute money laundering or aiding/abetting money laundering
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Whether you knew, or could have known, that the funds were criminal proceeds or other illegal assets
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Whether your involvement was merely part of routine 업무 (work-related involvement), or whether you had an intent to facilitate money laundering
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In virtual asset cases, whether you fall under the Specified Financial Information Act’s definition of a “virtual asset service provider (VASP)” and whether you fulfilled the reporting/registration obligations
Also, the fact that the transaction structure looked normal does not, by itself, negate legal responsibility.
In areas such as virtual asset transactions, the use of corporate accounts, and third-party relay structures, the key standard is substance over form—the reality, not the appearance.
Financial transactions or virtual asset transactions conducted in Korea are subject to the Specified Financial Information Act. Even if the transaction occurs overseas, it may still fall under the Act if it is conducted through Korean financial institutions or virtual asset service providers.
Assistance from Descent
Accordingly, Descent Law Office approaches AML cases not as a simple response to allegations, but through a structure-focused analysis.
Reflecting the characteristics of virtual asset and corporate transactions, the firm reviews fund flows and each party’s role in a multidimensional way, and from the early stages of an investigation, establishes a response strategy that considers both criminal and civil risks.
Based on extensive practical experience in similar cases, the firm provides realistic defense direction rather than merely formal advice.
In AML matters, outcomes can vary greatly depending on the timing and manner of response, and early choices can determine the course of the case.
Before it is too late, consult a professional expert first.
