[EDITORIAL] Pass Money Laundering Curbs

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[EDITORIAL] Pass Money Laundering Curbs

The anti-money laundering laws, the Act on Reporting Specific Financial Transactions and the Act on Regulating Profits From Crimes, have not passed the National Assembly since they were submitted in November 2000. It is the second time that such laws failed to pass the Assembly, with the first occasion during the previous Assembly. Although the opposition cites the possibility of political misuse and abuse as a reason that the bills are pending, they ought to be passed as soon as possible.

Fifty-three nations have legislated the anti-money laundering law, and among 29 OECD member nations, most have enacted it, except for four nations, including South Korea and Poland. Without such a law, which cracks down on transactions of illegal criminal funds and facilitates the exposures of such acts, "irregular" funds are likely to enter and leave South Korea in large quantities and economic confusion coming from speculative capital may occur frequently. There is even a concern that South Korea may be designated as uncooperative by the Paris-based Financial Action Task Force on Money Laundering.

With the implementation of the second-phase foreign exchange liberalization this year, such worries have grown. There is a report that last year foreign capital amounting to $4.4 billion, more than a double the sum the year before, entered South Korea via tax havens. Domestically, too, large-scale capital flights disguised as imports, exports, moves to foreign nations and travels abroad are a concern in the advent of foreign exchange liberalization.

Above all, the pending bills do not regulate legal political funds, for their goals are to bar 38 major crime-related funds, including money from drugs, organized crime, tax evasions and bribes. The opposition claims that these laws have room to be abused in the political arena because irregular political funds donated in exchange for favors may be construed as falling into the category of the new law, but this argument does not justify the opposition's objections. The laws have been drafted with international standards in mind. They clearly define major crimes, introduce the system to report suspicious transactions and specify the establishment of a financial intelligence unit specializing in information-gathering and analysis. The Assembly must pass the bills promptly before South Korea is viewed as a money-laundering refuge and international organizations limit Korea's financial transactions.

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