An opportunity to curb corruptionTerrorist attacks by the Islamic State, the so-called Panama Papers and North Korean nuclear threats are global concerns.
While these crises are highly risky and require prompt resolution, no single country can eradicate these problems. The Financial Action Task Force (FATF) is an organization that was established and in operation to resolve these issues through financial measures by monitoring money laundering. The FATF plenary meeting is being held in Busan from Wednesday to Friday.
The FATF was established in 1989 to prevent money laundering using financial companies through an agreement at the G-7 summit meeting. At first, it began from drug dealing and expanded to prevention of terrorist-sponsoring funds, corruption, tax evasion and weapons of mass destruction.
The FATF sets international standards; monitors 190 countries around the world, not just the member countries; tracks compliance with FATF international standards; and imposes serious disadvantages to countries that fail to meet the standards in international financial transactions.
Currently, North Korea and Iran face sanctions. After the terrorist attacks in Paris, the G-20, G-7 and United Nations emphasized effective implementation of FATF standards, and its role is highlighted as the Panama Papers has raised the need to investigate the actual owners of paper companies.
Korea joined the FATF, a group of money laundering prevention countries, in 2009. Korea’s money laundering prevention system was set up in 2001 when the Financial Intelligence Unit was established. Starting with the suspicious transaction report, the large cash transaction report and customer verification system was added in 2006 for a full-scale system.
To meet FATF standards, related laws have been revised consistently. Thanks to ongoing efforts for improvement, Korea’s money laundering prevention system is considered to meet international standards, despite the late start.
Former Financial Services Commission Chairman Shin Je-yoon has been leading the FATF as the president since last year. Following the tradition of holding the last plenary week in the country of the president, the meeting is being held in Busan. At the meeting, member countries will prepare actual implementation means to prevent terrorist funding and discuss ways to prevent tax evasion by the wealthy using offshore corporations.
The meeting will also conclude the procedure to establish the FATF Training and Research Institute in Busan. With the institute, Korea will continue to serve a leading role in international prevention of money laundering after Korea’s presidency ends.
The Busan plenary session is an opportunity to upgrade the transparency and confidence of the Korean financial system and make society fairer and without corruption.
Professor at Seoul National University