Definition of Criminalization of Money Laundering
Criminalization of Money Laundering means that ML is defined as an independent offence and can be punished accordinglu. The 1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances well explains the definition of criminalization of Money Laundering.
According to the Convention, each nations are required criminalize any of the following act: Knowing that such property is derived from any offences, or from an act of participation in such offences, (i) conversion or transfer of property for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence to evade the leagal consequences of his action; (ii) concealment or disguise of the true nature, source, location, disposition, movement, right with respect to, or ownership of property; and (iii) acquisition, possession or use of property.
Thus, for ML to be criminalized, money being laundered has to be illegal proceeds from predicate offences. ML offence can be considered as secondary offence committed from disguising or concealing criminal proceeds, for example, but the punishment of predicate offences doesn’t have to precede to criminalize money laundering. The key idea of criminalization of Money Laundering is to have ML offence punished gravely, separate from the predicate offence.
Korea has stiuplated the criminalization of ML in the Act on Regulation and Punishment of Criminal Proceeds Concealment and the Act on Special Cases Concerning the Prevention of Illegal Trafficking in Narcotics, respectively. On the ML offence, the former states imprisonment for labor not more than 5 years or fines not exceeding 30 million KRW, and the latter states imprisonment for labor not more than 7 years or fines not exceeding 30 million KRW.
The primary goal of the criminalization is to fundamentally eradicate economic factors that spur specific cases, and to maintain social security.
Criminal organization creates massive financial profit and wealth through criminal activities, eats into our economy by polluting all sectors of our economy and prevailing corruption, and ultimately threatens safety, security, and sovereignty. Hence, criminal proceeds are not simply the purpose of committing such offence but also their lifeline, of which the global community acknowledges its regulation as the most effective way to prevent crime. International standards provided by FATF, UN, etc. are also in line with this goal, to ultimately eradicate criminal activity by blocking the criminal proceeds.
Criminalization of Money Laundering is an international standard applied in more than 180 nations, since the adoption of the aforementioned 1988 UN Convention. Financial Action Task Force, FATF, currently allows to adopt list approach or threshold approach, or both, regarding the extent of predicate offence.
Korea has adopted list approach by designating 38 criminal activity as predicate offence since the founding of KoFIU in 2001. The scope of predicate offences has been expanded ever since to 116 offences under 54 legislation as of December 2021, as bribery, illicit offering, fraud·embezzlement·breach of trust, copyright infringement, speculative activity, other violation of specific cases, and Act on Prohibition Against the Financing of Terrorism and Proliferation of weapons of Mass Destruction are newly added to the list. In January 2022, the POCA was amended to incorporate threshold approach(capital punishment, imprisonment for life, imprisonment not less than three year, or without prison labor, for instance, were newly added) to the existing list approach, thereby laying an institutional ground to effectively handle the contemporary ML offence in line with the changing social environment.