Anti-Money Laundering (AML) is an institutional mechanism to prevent the act of disguising criminal proceeds as legitimate funds. The international standards for AML are established by the Financial Action Task Force (FATF), founded in 1989. FATF encompasses Europe, the Americas, the Middle East, and Africa, with 39 countries and 2 regional bodies as members. It establishes international standards to prevent money laundering and terrorist financing, and examines the level of implementation in each country through a periodic Mutual Evaluation review process. Countries placed on the FATF Black List (high-risk countries) or Grey List (countries under intensive monitoring) face severe disadvantages in international financial transactions.
Recently, the scope of AML has been rapidly expanding into the virtual assets and ESG domains. The European Union significantly strengthened customer identification obligations for virtual asset service providers through its 2024 AML Package, and also simultaneously introduced a beneficial ownership registration system to block the disguised investment of corrupt funds into ESG.
[Anti-Money Laundering (AML) Ⓟ ESG.ONL/ESG Today]
South Korea’s AML oversight body, the Financial Intelligence Unit (FIU), strengthened the suspicious transaction reporting obligations of virtual asset service providers through a 2023 amendment to the Act on Reporting and Using Specified Financial Transaction Information. Sanctions for AML violations by domestic financial institutions are publicly disclosed by the FIU, allowing detailed confirmation of violations and sanction measures.
From a corporate perspective, AML has emerged as a key indicator of ESG Governance, going beyond the realm of regulatory compliance. Global institutional investors are increasingly downgrading ESG ratings and excluding from investment companies with a history of AML violations, as the international community’s demand for financial transparency grows. AML implementation capacity is functioning as a yardstick of corporate sustainability beyond mere legal obligation.
by Editor O