Korea to introduce AI to filter out financial crimes

Korea to introduce AI to filter out financial crimes

To ramp up its contribution to global fights against money laundering and terrorism financing, South Korea will introduce an artificial intelligence-based system to better filter out financial crimes, said the country’s financial intelligence chief.

Yoo Kwang-yeol, commissioner of the Korea Financial Intelligence Unit, said his agency is currently working to upgrade the main system that stores and analyzes information regarding hundreds of millions of financial transactions in order to increase accuracy of capturing suspicious transactions out of normal ones.

“We are considering an uptake of the artificial intelligence technology to improve the current intelligence system by benchmarking advanced systems in countries like Australia and Canada,” Yoo said in an interview with The Korea Herald.

For this, a group of KOFIU experts paid a trip to Australia earlier this month to learn from the Australian financial intelligence system.

“AI can help improve efficiency of sorting out suspicious financial transactions and accuracy of analyzing related account information,” Yoo said.

The KOFIU currently has 64 experts on financial intelligence, which is a relatively small workforce considering the rising number of suspicious transactions that are getting cleverer in an economy equipped with state-of-art financial and information technology techniques.

“Financial crimes in disguise of fintech (financial technology) and global trade are also on the rise,” Yoo said. “Officially, the annual figure for suspicious transactions jumped from 620,000 last year to 800,000 this year as the economy gets more complicated.”

KOFIU is an agency established in 2001 under the Financial Service Commission in order to analyze reports of suspicious transactions from financial institutions and relay the financial information to law enforcement agencies if any transaction is deemed to have connections with money laundering or terrorism financing.

Yoo, a technocrat on international financial cooperation, was appointed the KOFIU commissioner five months ago.

As a member of the Financial Action Task Force that was created in 1989, Korea has been recently increasing efforts to contribute to the global efforts to root out financial crimes including financing drug trafficking, smuggling, terrorism and weapons of mass destruction.

Korea signed up for membership of the FATF in 2009. The FATF has 37 regular members and 24 observers, including the International Monetary Fund, World Bank and Asian Development Bank. Shin Je-yoon, former FSC chairman, served as president of the FATF this year.

The KOFIU held its Anti-Money Laundering Week in the final week of November and hosted a series of seminars and meetings with domestic and foreign AML experts to garner ideas for policymaking.

The country also in September launched a training and research institute on anti-money laundering FATF TREIN in Busan and appointed a former World Bank specialist as the inaugural director.

“Among the OECD (Organization for Economic Cooperation and Development) member countries, Korea was a bit late to join the FATF,” Yoo said. “But the government is doubling its efforts to do more for the international community as an FATF member by improving domestic laws on AML.”

As part of the policy efforts, Korea is revising laws to mandate lawyers, accountants, real estate agents and jewelry sellers to keep records of large financial transactions starting in 2018 in line with international standards to combat money laundering. Currently, only financial institutions and casinos are required to do so.

“Korea will be subject to a mutual evaluation by its FATF peers in 2019 on as many as 40 categories of rules and regulations tackling money laundering,” Yoo said. “It is important to get a high score from the evaluation, because we can play a leading role as an outstanding FATF member in preventing illegal financial activities intended by North Korea for its nuclear weapons.”


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