1. Does South Korea have a sanctions regime in place?
Yes, South Korea effectively implemented the sanctions regime of the UN Security Council (hereinafter “UNSC”). The UNSC sanctions regime has a significant meaning to South Korea because South Korea faces a constant threat of North Korean nuclear and missile tests. South Korea finds the sanctions regime an effective instrument in dealing with the North Korean issues. As a member state of the UN, South Korea views it as an obligation to implement the UN sanctions. Thus, the Korean Government has established a concrete system to fully implement the sanctions regime under the relevant Security Council resolutions.
2. Does South Korea implement UN sanctions?
As a member of the UN, South Korea is obligated to accept and carry out the measures taken by the UN. Generally, South Korea implements the UNSC resolutions based on the existing laws and regulations of South Korea and enacts enforcement decrees or notices to implement specific measures. The Foreign Trade Act, the Foreign Exchange Transactions Act, and the Customs Act are the examples of such implementation. Excerpts from these laws are as follows: Arms Embargo and related restrictions Embargoes and restrictions on the arms and related materials are governed by the Foreign Trade Act of the Trade, Industry and Energy. Under Article 5 of the Foreign Trade Act (hereinafter “Act”), the Minister for Ministry of Trade, Industry and Economy may provide a restriction or ban on exportation and importation of goods. Subsection 4 of Article 5 states that one of the grounds of such a restriction or ban is “when it is necessary to perform duties to maintain international peace and security.” By including this, South Korea provides a basis for implementing the UNSC resolutions on arms embargoes. Moreover, Article 19 of the Act prescribes that these measures are to be made in accordance with the principles of the multilateral international export control system. Article 32 of enforcement decrees of the Act prescribes of International Export Control System such as The Wassenaar Arrangement and The Nuclear Supplier Group. Based on this, from Article 19 to Article 25, the Act provides specific provisions for restrictions on the import and export of strategic materials (military items and dual-use items), mass destruction weapons, and materials that can be used for manufacturing, developing, using, and storing missiles. Other specific details are promulgated through a notice of trade of strategic materials to control restricted items to or from specific countries. As to sanctions against North Korea, even if an item is not identified as a strategic material based on the Foreign Trade Act and the “Notice on Export of Strategic Materials to North Korea and Approval Process,” depending on the end-user, if the item can be used for manufacturing a mass destruction weapon, South Korea implemented measures such as a catch-all ban to control the exports since 2003. Moreover, South Korea controls transfer of technical training, consulting, and services prohibited by the UNSC resolutions under the South-North Exchanges and Cooperation Act. After the Cheonan incident, South Korea also bans eight items related to nuclear, missile, and chemical weapons and thirteen items identified as luxury goods through the “Notice on Export of Strategic Materials to North Korea and Approval Process.” Screening and blocking measures South Korea implemented measures of screening and blocking based on the UNSC resolutions through various Acts such as the Customs Act, Aviation Act, Public Order In Open Ports Act, and Territorial Sea and Contiguous Zone Act. Pursuant to these Acts, South Korea screens and blocks suspicious cargos within its territory that are shipped to, or originated from, North Korea. Financial and economic sanctions In South Korea, the ministries responsible for financial and economic sanctions are the Ministry of Strategy and Finance, the Ministry of Justice, the Financial Services Commission, and the Ministry of Unification as to North Korea sanctions. Among these, the Ministry of Strategy and Finance mainly implements the sanctions resolutions through the “Guidelines for payment and receipt permits for the Implementation of Obligations for the Maintenance of International Peace and Security.” The Minister of Strategy and Finance places a list of sanctioned entities, as specified in the Guidelines, on the Ministry’s website and its official gazette, and sends them to related agencies and foreign exchange banks and requests implementation of economic sanctions against these entities. The NGOs then devise concrete and detailed measures to implement the measures based on the above laws and guidelines. On the other hand, the Financial Services Commission and the Ministry of Justice regulates financial transactions for manufacture, acquisition, maintenance and development of mass destruction weapons under the laws on the reporting and use of certain financial transactional information, the laws on the regulation and punishment of crime concealment, and the laws on the prohibition of fundraising for activities threatening the public. The Financial Intelligence Unit under the Financial Services Commission collects and analyses transactions from financial institutions that allegedly committed money laundering and provides information of such financial transactions determined to be related to illegal transactions, money laundering, or fundraising for threatening the public to the legal enforcement institutions such as the Prosecutors Office, the Police Office, the National Tax Service, and the Financial Services Commission. The Unit is also responsible for making agreements and exchanging information with foreign financial intelligence units. With regard to North Korea, South Korea prohibits financial and cash services, establishment of North Korean banks, and joint ventures with North Korean entities pursuant to the laws on the South-North Exchanges on Cooperation and the laws on South-Korean Cooperation Funds. Ban on travel The Ministry of Justice and the Ministry of Unification are responsible for implementing travel ban. The Ministry of Justice implements restrictions based on immigration law. The Ministry of Foreign Affairs sends a list of persons and entities against whom travel ban is imposed under the UNSC resolutions to the Minister for Ministry of Justice, and the Ministry of Justice adds them on the national border checkpoint list based on the Enforcement Decree of the Immigration Act. Moreover, pursuant to Article 9 of the South-North Exchanges and Cooperation Act and the National Security Act, the Ministry of Unification regulates South Korean citizens visiting North Korea and North Korean citizens visiting South Korea. When sanctions are imposed under the UNSC resolutions and the persons are identified, the Ministry of Unification updates the list of persons against whom travel ban is imposed.
3. Does South Korea implement an autonomous sanctions regime?
According to the Act on Prohibition Against the Financing of Terrorism and Prohibition of Financing for Offences of Public Intimidation & Proliferation of Weapons of Mass Destruction, the Financial Services Commission may designate any individual, corporation or organization that is deemed to be related to the financing of terrorism. Such designations are publically announced. Designation will occur where it is necessary to ensure that South Korea complies with treaties and international law. South Korea will also designate individuals and entities where it is necessary to do so to contribute to international efforts to sustain international peace and security.
4. What is the nature of the sanctions regime in South Korea?
Sanctions include restrictions on the ability of a designated person/entity to carry out financial transactions without a permit/approval. In addition, it is prohibited for any person to provide (or raise) funds or property to or for the benefit of a designated person/ entity. Failure to comply with the relevant restrictions constitutes a criminal offense. South Korea also implements arms embargoes, export controls and immigration controls. See Question 2 for more details.
5. Does South Korea maintain a list of sanctioned individuals and entities?
The Ministry of Strategy and Finance maintains a list of sanctioned entities and individuals, which reflects the UN’s lists.
6. Are there any other lists related to sanctions?
As discussed above, the Financial Services Commission can designate any individual, corporation or organization deemed to be related to the financing of terrorism. As such, an ad hoc notice or list can be issued.
7. Does South Korea have a licensing or authorization system in place?
Yes, the Financial Services Commission can authorise financial transactions related to people which it has designated. It can also delegate its authority to the Governor of the Bank of Korea to grant a permit. Further, the Ministry of Trade, Industry and Energy, the Council for Nuclear Safety or the Defence Acquisition Program Administration may authorise exceptions to exports or imports which seem to be related to sanctions, under the condition that it is proven that they are unrelated to sanctions and used only for peaceful purposes.
8. What are the consequences for a breach of sanctions in South Korea?
The Act on Prohibition Against the Financing of Terrorism and Prohibition of Financing for Offences of Public Intimidation & Proliferation of Weapons of Mass Destruction provides for a number of penalties where funds/assets may be used for terrorism. It specifically states that a person providing funds or property to a person designated under the Act, without a permit, shall be liable to a term of imprisonment not exceeding three years or a fine not exceeding 30 million won. South Korea also provides criminal penalties for individuals who form or join or act as a member of a group that aims to commit a crime under Article 114 of the Criminal Act that is subject to death penalty, weapons, or imprisonment for more than four years. In particular, for those crimes violating Article 4 of the Punishment for Violent, etc. Act, a person may be punished with a minimum 2 years of imprisonment to life imprisonment or death penalty for organizing a crime group (Article 5 of the same Act). As for the funds related to terrorism, Article 32 and Article 48 of the Criminal Act stipulate that those concerned with the funds are punished as main offenders and their funds are seized. As to North Korea, Article 27 of the South- North Exchanges and Cooperation Act stipulates that if a person illegally receives a permit to transfer strategic materials to North Korea or transferred strategic materials without a permit, he or she may be punished by imprisonment of three years at the maximum or with a penalty up to ten million won. Accordingly, South Korea has provisions for punishment in place in case a person violates domestic measures implemented pursuant to the UNSC resolutions based on the existing domestic laws and regulations.
9. Who are the relevant regulators in South Korea and what are their contact details?
Financial Services Commission
Seoul Government Complex 209 Sejong-daero Jongno-gu Seoul South Korea T: (+82) 2 2100 2568 E: firstname.lastname@example.org
Financial Services Commission is the central government body responsible for financial policy and supervision.
Financial Supervisory Service
38, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea T: (+82) 2 3145 5114 F: (+82) 2 3145 7897 E: email@example.com
Financial Supervisory Service is the regulator responsible for the supervision of financial institutions.
Ministry of Justice
Building #1 Government Complex-Gwacheon 47, Gwanmun-ro Gwacheon-si Gyeonggi-do South Korea T: +82 2 2110 3000 E: firstname.lastname@example.org
Ministry of Justice is the regulator responsible for the travel ban
Ministry of Trade, Industry and Economy
02 Hannuri-daero Sejong-si 30118 South Korea T: (+82) 44 203 4000 F: (+82) 44 203 4807
Ministry of Trade, Industry and Economy is the regulator responsible for the Foreign Trade Act with regard to Arms Embargo and related restrictions
Ministry of Unification
Government Complex – Seoul 209 Sejong-daero (Sejong-ro) Jongno-gu, South Korea T: (+82) 2 2100 5765 F: (+82) 2 2100 5939
Ministry of Unification is the regulator responsible for the travel ban with regard to North Korea
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