FIU to Share 'Suspicious Money Laundering Transaction Information' with Banks... Push for Special Act Amendment

FIU's Suspicious Transaction Data

Plan to Share with the Financial Sector

Strengthening Public-Private Cooperation for Rapid Money Laundering Prevention

Need for Clear Scope and Personal Data Protection Measures

The Financial Intelligence Unit (FIU) is pushing to amend the law to allow the sharing of information on ‘suspicious transactions related to money laundering’—which is currently prohibited under existing legislation—with financial institutions. After analyzing suspicious transactions, the FIU would provide this information to the financial sector, enabling multiple financial institutions to jointly track the flow of funds that are scattered across different companies. The aim is to strengthen public–private cooperation and more effectively detect and block money laundering crimes, in response to the increasingly sophisticated and advanced methods used for money laundering.

According to the financial authorities on July 5, the FIU is working on revising the “Act on Reporting and Using Specified Financial Transaction Information” (the Special Act on Financial Transactions) to allow the FIU to provide relevant information to financial institutions if, after analyzing a financial institution’s Suspicious Transaction Report (STR), it suspects a specific individual of money laundering.

An STR is a system in which financial institutions report to the FIU any unusual financial transactions that deviate from a user’s typical transaction patterns and income. Currently, even if the FIU analyzes an STR, it can only provide related information to agencies specified by law, such as the prosecution, the police, or the National Tax Service. As a result, there have been concerns that it is difficult to deliver analysis results to financial institutions for them to review the relevant transactions and further verify possible money laundering activities.

If the law is amended, authorities will be able to gain a more comprehensive picture of accounts held by suspected money launderers across multiple financial institutions. For example, if Bank A reports a suspicious transaction to the FIU, and after analysis the FIU determines there is a suspicion of money laundering, it would share the relevant information with Bank A and other financial institutions. Banks B and C, having received this information, would analyze transaction records held by the same account holder, and if new suspicious transactions are found, these would be reported back to the FIU. This is intended to address the limitation that, since money launderers often disperse funds across multiple institutions, analyzing STRs on an individual institution basis made it difficult to grasp the overall flow of funds.

An official from the financial authorities stated, “Currently, there is no legal basis for the FIU to provide additional information identified through analysis of STRs from financial companies back to those companies,” adding, “We plan to revise the law so that the FIU can provide necessary information to financial institutions and thereby enhance our capabilities to combat money laundering.” The official continued, “This is one of the core elements of the first comprehensive revision of the Special Act on Financial Transactions in 25 years since it was enacted in 2001,” and explained, “We will quickly prepare the amendment and submit it to the National Assembly.”

This kind of mutual information sharing between public and private sectors to combat money laundering is expanding internationally as well. In the United States and other major countries, anti-money laundering agencies provide suspicious transaction information to the financial sector. The Financial Action Task Force (FATF) also highlighted the need for enhanced public–private information sharing and cooperation as a major agenda item at its recent plenary meeting in Paris, France. Next month, the FATF is scheduled to release guidelines reflecting various national information-sharing models and principles for protecting financial information.

The key issue is determining the extent to which financial information can be provided and accessed during the stage of money laundering suspicion. One of the challenges is to set clear standards, such as whether to allow information sharing based on mere suspicion or only when the FIU has substantially verified the money laundering suspicion. There are concerns that overly broad information sharing and account access authorities could lead to controversy over violation of financial privacy. The FIU is preparing detailed measures to provide only the necessary scope of information for suspicious transaction cases, and to ensure internal approval and other control mechanisms are in place.

An official from the financial authorities said, “The basic direction is not to share financial information broadly, but to use only the minimum information necessary for analyzing suspicious transactions as an exception,” and added, “We will strictly limit the subjects, scope, and procedures for sharing information to minimize concerns about invasion of personal information.”

The FATF also recommends expanding information sharing among financial institutions, but emphasizes that the purposes and scope of information use must be limited, and appropriate safeguards must be established to protect personal data.

Jaebin Cho, partner attorney at Barun Law LLC, stated, “Laws should specify the scope of subjects, periods, and post-control procedures for accessing financial information to ensure that the exercise of authority remains as limited as possible,” adding, “In cases where suspicion is not confirmed, there should also be prompt relief mechanisms and procedures for the management and disposal of financial information.”

This content was produced with the assistance of AI translation services.