"The Hidden Enforcers Behind Cambodia Crime Sanctions: Four FIU Members Guarding the Frontlines of Transnational Financial Crime"

FIU Blocks Money Laundering and Terrorist Financing
Only 30 Out of 70 Staff Members Are Financial Services Commission Officials
Personnel Seconded from the Prosecution, Police, Korea Customs Service, and National Tax Service
Tracking the Flow of

Last summer, Bank A detected suspicious transactions in a local primary account in Cambodia. Dozens to hundreds of transactions, each worth tens of millions of won, were occurring consecutively and periodically from a specific account. The flow of funds was also abnormal, with money moving from Account B to Account C and then on to a third account. Bank A reported the case to the Financial Intelligence Unit (FIU) according to criteria for suspicious transactions related to money laundering, and the FIU tracked and analyzed the case in detail. The result was shocking: the name of a member of a Cambodian criminal organization was discovered.

As transnational financial crimes have increased recently, the hidden efforts of the FIU are drawing attention. The FIU, an organization under the Financial Services Commission established in 2001 to prevent money laundering and terrorist financing, analyzes suspicious transactions reported by financial institutions and forwards them to law enforcement agencies, achieving tangible results. Due to the nature of its organization and work, the FIU avoids public exposure and cannot disclose matters under review or analysis. It is, quite literally, an organization "working in the shadows while aiming for the light."

There Is a Reason for the Swift Detection of Suspicious Transactions... Institutionalizing Extraction Criteria

The FIU's organizational structure is unique. It consists of the Planning and Administration Office, the Institutional Operations Division, the Virtual Asset Inspection Division, and the Review and Analysis Office. There are about 70 employees, with around 30 being officials from the Financial Services Commission. The rest are personnel dispatched from the prosecution, police, Korea Customs Service, and National Tax Service.

The FIU's work is largely divided into two areas: planning the anti-money laundering system and reviewing and analyzing suspicious transaction reports from the financial sector. The Planning and Administration Office and the Institutional Operations Division are responsible for the system. The Planning and Administration Office handles the Act on Reporting and Using Specified Financial Transaction Information (the Special Act) and the Act on Prohibition of Financing for the Purpose of Public Threats and the Proliferation of Weapons of Mass Destruction (the Anti-Terrorism Financing Act). The recent financial transaction restrictions imposed on Prince Group, which was implicated in the Cambodia incident, were also reviewed and implemented by the FIU's Planning and Administration Office in cooperation with the Ministry of Foreign Affairs.

The Institutional Operations Division is responsible for creating extraction criteria to help financial institutions, like Bank A, detect suspicious transactions effectively. This division develops suspicious transaction standards, shares them with banks, and inspects whether banks are properly reporting money laundering cases. For this reason, it is considered a core department, typically led by a highly competent manager at the Financial Services Commission. Min Inyoung, head of the Institutional Operations Division (51st Civil Service Exam), is known for her ability to clarify complex regulations and internal rules of financial institutions.

For example, financial institutions must automatically report to the FIU any cash deposits or withdrawals of 10 million won or more. The information provided by the FIU is then used in tax investigations by the National Tax Service or in investigations by the prosecution and police. In fact, last year, the National Tax Service used FIU-provided information to recover 1.9 trillion won in evaded taxes, and the Korea Customs Service referred currency exchange crimes worth about 1.4 trillion won to the prosecution.

Following the "Cambodia incident," banks have begun to scrutinize and report to the FIU not only false trade transactions and illegal currency exchanges but also suspicious transactions focused on transnational crimes. The FIU receives reports of suspected transnational crime transactions not only from banks but also from savings banks, securities firms, insurance companies, and the entire financial sector. The person who actually established these criteria was also Director Min.

The same applies to the Virtual Asset Inspection Division, led by Director Kim Mijeong (50th Civil Service Exam). This division is the only one within the Financial Services Commission whose name includes "inspection." It is responsible for on-site inspections of whether virtual asset service providers (VASPs) are fulfilling their anti-money laundering obligations, including high-risk customer evaluations, monitoring, and reporting of suspicious transactions. If violations are found, the division submits disciplinary action proposals to the FIU.

The recent decision to suspend operations and impose fines on Dunamu (Upbit) was also the result of this division's on-site inspection. In addition, the division works around the clock in cooperation with the National Police Agency and Korea Customs Service to block money laundering crimes committed by illegal virtual asset operators and to maintain a sound market order.

"Currency Exchange, Tax Evasion, and Criminal Funds Cannot Be Hidden"... Thorough Analysis of Suspicious Transactions

The Review and Analysis Office is the department that directly analyzes suspicious transactions reported by financial institutions. This office is staffed by financial crime experts selected from the prosecution, police, Korea Customs Service, and National Tax Service, who work alongside Financial Services Commission employees. Notable examples include Kim Hyunseo (50th Bar Exam), head of the Information Analysis Team, dispatched from the prosecution, and Kim Mijeong (51st Civil Service Exam), head of the Review and Analysis Division 2, from the Korea Customs Service.

The main work of the Review and Analysis Office is divided into two major areas. First, it analyzes suspicious transactions reported by financial companies or casinos and provides the results to ten law enforcement agencies. If a suspicious transaction is deemed related to criminal funds, the information is sent to the prosecution or police; if illegal currency exchange is suspected, it goes to the Korea Customs Service; and if tax evasion is suspected, it is sent to the National Tax Service. After analyzing suspicious transaction details received from financial companies and casinos, the results are provided to ten law enforcement agencies.

Second, the office provides suspicious transaction reports (STRs) and large cash transaction reports (CTRs) required by law enforcement agencies during investigations. When an agency submits a request, the FIU reviews the validity of the suspicion and selectively provides only the necessary information.

CTRs are automatically reported when cash deposits or withdrawals of 10 million won or more occur. STRs are reported by financial institutions based on their own criteria, regardless of the amount, when there is suspicion of money laundering, concealment of criminal proceeds, or terrorist financing. The reason these criteria are not disclosed is to prevent criminals from exploiting loopholes and modifying their money laundering methods.

For example, when you transfer more than 10 million won at a bank and the staff asks, "Are you sending this to a family account?" this procedure is part of the process. If the staff notes anything unusual, it can later be used as a reference during an investigation.

Additionally, if investigative agencies need to verify STR or CTR data, they must submit the subject, the gist of the suspicion, and the necessity to the FIU. The FIU reviews the request and only provides financial institution data when it is justified.

The basic principle of criminal investigation is to trace the "flow of money." While prosecutors and police can obtain financial transaction records directly with a warrant, STR and CTR information reported by financial institutions based on their own judgment can only be accessed through the FIU. Because the work of the Review and Analysis Office is strictly confidential under the Special Act, even if the FIU plays a key role in apprehending major criminal organizations, the specific analysis process is not disclosed to the public.

Meanwhile, the FIU is working to introduce an account suspension system to respond to increasingly sophisticated money laundering crimes. To minimize inconvenience caused by account freezes, the scope of application will be limited, and the FIU also plans to strengthen its internal organizational capabilities. In addition, the introduction of anti-money laundering systems for non-financial sectors such as lawyers, accountants, and tax accountants is under consideration.