Adopted by Decree No.1113 of the Presidium of the Supreme People’s Assembly on April 20, Juche 105(2016)
CHAPTER 1 FUNDAMENTALS
Article 1 (Objective)
This Law is enacted for the purpose of taking stringent measures for the prevention of money laundering and financing of terrorism, and enhancing the roles of Financial Intelligence Unit and supervisory and regulatory institutions, thereby ensuring the integrity of the country’s financial system, stability of the social system and economic development.
Article 2 (Definitions)
For the purpose of this Law:
Money laundering means an offence whereby unlawful property is transacted to make it appear to have originated from legitimate sources, which includes the following acts;
1) Transfer or conversion of property, knowing that such property is the proceeds of unlawful activity, for the purpose of concealing or disguising the origin of such property,
2) Acquisition, possession or use of property, or concealment or disguise of the true nature, origin, location, disposition, movement or ownership of or rights with respect to such property, knowing that such property is the proceeds of unlawful activity,
3) Attempts to commit the offences as defined by 1) and 2), as well as participation as an accomplice in the commission thereof through aiding, abetting, facilitating and counseling the commission, and
4) Assisting any person involved in the commission of the unlawful activity as defined by 1), 2) and 3) to evade the legal consequences thereof.
2. Financing of terrorism means supporting terrorist organizations or terrorists through commission of the following acts;
1) Collection or provision of property by any means, directly or indirectly with the intention that such property is to be used by a terrorist organization or an individual terrorist to carry out a terrorist act or for any other purposes,
2) Collection or provision of property with the knowledge that such property, whether of legitimate or illicit origin, is to be used in full or in part by terrorist organizations or individual terrorists for terrorist or any other purposes,
3) Attempting to commit, or organizing or directing others to commit the offences as defined by 1) and 2), as well as participation as an accomplice in the commission thereof through aiding, abetting, facilitating and counseling the commission, and
4) Assisting any person involved in the commission of the unlawful activity as defined by 1), 2) and 3) to evade the legal consequences thereof.
3. Predicate offence means any offence as a result of which proceeds have been generated that may become the subject of money laundering, in which the following acts are included;
1) Participation in an organized criminal group and racketeering,
2) Terrorism, including terrorist financing,
3) Trafficking in human beings and migrant smuggling,
4) Sexual exploitation, including sexual exploitation of children,
5) Illicit trafficking in narcotic drugs and psychotropic substances,
6) Illicit arms trafficking,
7) Illicit trafficking in stolen and other goods,
8) Corruption and bribery,
10) Counterfeiting currency,
11) Counterfeiting and piracy of products,
12) Environmental crime,
13) Murder, grevious bodily injury,
14) Kidnapping, illegal restraint and hostage taking,
15) Robbery and theft,
17) Tax crimes,
21) Insider trading and market manipulation, and
22) Other offences constituting predicate offence in the Criminal Law of the DPRK.
4. Proceeds of offence mean any property derived from or obtained, directly or indirectly, through the commission of any predicate offence;
5. Property means assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, however acquired, and legal documents or instruments evidincing title to, or interest in such assets;
6. Reporting institutions mean institutions and individuals providing banking, insurance, auditing, money change, precious metals and stones purchase, casino, notary and lawyer services, who are obligated to submit reports concerning money laundering and financing of terrorism;
7. Customer means institutions, enterprises, organizations and individuals that have transactions with reporting institutions;
8. Beneficial owner means a person on whose behalf a transaction is being conducted, including those persons who excercise ultimate effective control over an institution, enterprise or organization;
9. Suspicious transaction means a transaction that is to be conducted by a person whose identity is dubious, as well as a transaction that involves property suspected to be the proceeds of offence, or related to money laundering or financing of terrorism;
10. Large transaction means transaction by a customer of cash, non-cash, bearer negotiable instruments or precious metals and stones, the amount thereof being over the threshold prescribed by the competent institution;
11. Freezing means prohibition of the transfer, conversion, disposition or movement of any property or instrumentalities suspected to be involved in unlawful activity on the basis of, and for the duration of the validity of, an action initiated by the competent institution;
12. Financial Intelligence Unit means an institution charged with receipt, collection and analysis of large or suspicious transaction reports and other information relevant to predicate offences, money laundering and financing of terrorism, as well as dissemination of the results of the analysis to the institutions concerned; and
13. Supervisory and regulatory institutions mean law enforcement institutions such as public prosecutors’ offices and the public security institutions, and other institutions with supervisory and regulatory powers over matters concerning money laundering and financing of terrorism.
Article 3 (Principle in the AML/CFT efforts)
It is a consistent policy of the Democratic People’s Republic of Korea to oppose money laundering and financing of terrorism.
The State shall establish an efficient AML/CFT system and ensure that all institutions, enterprises, organizations and individuals strictly observe this Law, so that money laundering and financing of terrorism can be prevented.
Article 4 (National Coordinating Committee)
There shall be established the National Coordinating Committee for the purpose of providing unified coordination of the national AML/CFT efforts and promoting cooperation with foreign countries and international organizations.
The composition and functions of the National Coordinating Committee shall be provided in the Regulations concerned.
Article 5 (Scope of application)
This Law shall be applicable to all the DPRK institutions, enterprises, organizations and individuals, as well as foreign-invested businesses and foreigners in the territory of the DPRK.
This Law shall also be applicable to foreign legal persons and individuals that conduct transactions with the DPRK institutions, enterprises, organizations and individuals.
Article 6 (Relation with other laws)
Matters not provided for by this Law concerning AML/CFT shall be governed by the laws and regulations concerned.
CHAPTER 2 REPORTING INSTITUTIONS
Article 7 (Obligations of reporting institutions)
Making timely reports on money laundering and financing of terrorism is a high priority in the AML/CFT efforts.
Reporting institutions shall faithfully fulfill such obligations provided in this Law as customer due diligence (CDD) measures, reports on large or suspicious transactions, record keeping and others.
Article 8 (CDD measures)
Reporting institutions shall undertake CDD measures when:
1. A customer wishes to open an account or establish other business relations;
2. A customer wishes to make changes to his/her identification data;
3. A permanent or occasional customer wishes to conduct a transaction in excess of the threshold prescribed by the competent institution;
4. Having a suspicion that a customer or a transaction is related to money laundering or financing of terrorism; and
5. Having doubts about the veracity of previously obtained customer identification data.
Article 9 (Obtaining information on customers and beneficial owners)
Reporting institutions shall obtain the following data from customers:
1. Details in the identification documents such as a citizenship card or a passport in case the customer is a DPRK citizen or a foreigner;
2. The name, business licence, address of the registered office, contact address, control structure and name of the chief in case the customer is an institution, enterprise or organization;
3. The identity of an agent and details of authorization in case a transaction is to be conducted by an agent;
4. Identification details in case the beneficial owner is a DPRK citizen or a foreigner;
5. The name of the chief, business license, contact address and control structure in case the beneficial owner is an institution, enterprise or organization; and
6. Other identification data as may be required.
Article 10 (Verification of identification data)
Reporting institutions shall verify the identification data obtained from customers by making requests for that purpose to the institutions concerned.
Article 11 (Ongoing due dilligence on business relationship)
Reporting institutions shall conduct ongoing due dilligence throughout the course of business relationship to ensure that the transactions conducted by customers are consistent with their knowledge of the customer, their business profile and the source of funds.
Article 12 (Transactions requiring special monitoring)
Reporting institutions shall pay special attention to:
1. Any complex, unusual or large transactions;
2. Any patterns of transactions that have no apparent economic or lawful purposes;
3. Transactions that are conducted through the use of new technologies or business practices;
4. Transactions that do not contain complete information on beneficial owners;
5. Several transactions conducted by a customer within twenty-four hours, whose total value exceeds the threshold prescribed by the competent institution;
6. Transactions with persons with whom the reporting institution had no face-to-face contact during the implementation of identificaton procedure; and
7. Business relations and transactions with institutions or persons in countries that do not have adequate AML/CFT system in place.
Article 13 (Prohibition of provision of service)
Reporting institutions shall not provide services where:
1. The identity of a customer or beneficial owner is dubious;
2. A customer fails to produce the required identification data truthfully;
3. A customer wishes to open numbered or anonymous accounts, or accounts in obviously fictitious names; and
4. A customer wishes to conduct transactions with a target of sanctions designated by the State in accordance with the Regulations concerned, or with entities or individuals acting on their behalf or at their direction.
Article 14 (Relationships with foreign financial institutions)
Financial institutions that wish to establish new relationships with foreign counterparts shall obtain approval from the institution concerned. In this case adequate information shall be collected concerning the nature of business, reputation, quality of supervision and internal AML/CFT controls.
Article 15 (Record-keeping of customer identification and transactions)
Reporting institutions shall maintain data obtained through CDD measures, account files, business correspondence and other data concerned for at least five years following the termination of the business relationship.
Reporting institutions shall make available, upon request, to the FIU and law enforcement institutions all CDD information and transaction records without undue delay.
Article 16 (Establishment of internal reporting system of large or suspicious transactions)
Reporting institutions shall establish a reporting system of large or suspicious transactions and designate reporting officers.
Employees shall promptly report any large or suspicious transactions discovered in the course of performance of their duties to the reporting officer, who shall review them and make a report to the FIU without delay.
Article 17 (Reporting large or suspicious transactions)
Reporting institutions shall report large or suspicious transactions to the FIU within forty-eight hours of detecting thereof. In the case of a transaction or an attempted transaction suspected to be related to money laundering or financing of terrorism, report thereon shall be made, regardless of the amount of the transaction, to the FIU within twenty-four hours.
Article 18 (Contents of suspicious transaction reports)
Large or suspicious transaction reports shall contain the followings:
1. Name and address of the reporting institution, and identity and contact details of the reporting officer;
2. Identification data of the customer and beneficial owner;
3. Type and date of transaction, the number and type of the account, amount transacted, type of currency and parties involved in the transaction;
4. A brief description of the reasons that justify the suspicion; and
5. Other related particulars.
Article 19 (Reporting methods)
Large or suspicious transaction reports shall be made by means of e-mail, fax or telephone. In this case reports made by means of telephone shall be confirmed in a written form.
Where the above-mentioned means of communication are not available, reports may be made in writing.
Article 20 (Confidentiality)
Reporting institutions shall not disclose to anybody customer identication data, transaction records and other related data.
Where reporting institutions filed large or suspicious transaction reports with the FIU, or transmitted related information to the law enforcment institution as circumstances so require, they shall be exempted from liability for breach of obligation in respect of confidentiality.
Article 21 (Exemption from liability)
Reporting institutions shall not be held liable for any consequences resulting from the reported transactions even if it is proved that they are not related to money laundering or financing of terrorism.
Article 22 (Development and implementation of internal guidelines)
Reporting institutions shall develop and implement internal guidelines for AML/CFT, which shall contain:
1. Customer acceptance policy;
2. Procedures for conducting CDD measures and for verifying and updating customer identification data;
3. Procedures for processing and reporting large or suspicious transactions;
4. Obligations of record keeping and confidentiality;
5. Procedures for transmitting directives received from the FIU and the supervisory and regulatory institution and for reporting the results of the execution thereof;
6. Functions of the AML/CFT compliance officer;
7. Training of employees on AML/CFT; and
8. Other matters as may be required.
Article 23 (Compliance officers)
Reporting institutions shall appoint compliance officers for AML/CFT purposes, and ensure that they supervise compliance by the employees with the provisions of this Law, Regulations and the internal guidelines.
Article 24 (Obligation to provide information required for investigative and supervisory purposes and international cooperation)
Reporting institutions shall timely provide the information required by the supervisory and regulatory institutions for AML/CFT purposes, as well as for international cooperation. Provision of such information shall not be treated as breach of confidentiality in respect of bank and professional secrecy.
CHAPTER 3 FINANCIAL INTELLIGENCE UNIT
Article 25 (Affiliation and status of FIU)
The Financial Intelligence Unit shall be established under the Ministry of People’s Security.
The Financial Intelligence Unit shall be an operationally independent institution that engages in financial intelligence work for AML/CFT purposes.
Article 26 (Obligations and powers of FIU)
The FIU shall have the obligation and power to:
1. Receive, collect and analyze large or suspicious transaction reports from reporting institutions and where necessary, transmit, subject to the prescribed prosedures, the results of the analysis to the institutions concerned;
2. Have access to the information at reporting institutions, supervisory and regulatory institutions and others concerned for AML/CFT purposes;
3. Monitor the accounts of the customers concerned in case there are reasonable grounds to suspect that they are related to predicate offences, money laundering or financing of terrorism;
4. Have internal rules in place governing the security and confidentiality of information including procedures for storage, dissemination, and protection of, and access to, information;
5. Issue to the reporting institutions guidelines specifying their obligations in respect of customer identification, record keeping and large or suspicious transaction reports; and
6. Exchange information with foreign counterparts subject to the principle of reciprocity.
Article 27 (Obligation of confidentiality by FIU officers)
FIU officers shall keep in strict confidence any information that came to their knowledge in the course of performance of their duties and not use them for purposes other than for AML/CFT.
They shall not disclose them even after retirement, transfer to different posts or cessation of duties within the FIU.
Article 28 (Database)
The FIU shall build a database containing information concering large or suspicious transactions, predicate offences, money laundering and financing of terrorism, which shall be regularly updated with a view to ensuring maximum effectiveness of the operational analysis.
CHAPTER 4 SUPERVISORY AND REGULATORY INSTITUTIONS
Article 29 (Obligations and powers of Financial Supervisory Bureau)
The Financial Supervisory Bureau shall have the obligation and power to:
1. Supervise and ensure compliance by reporting institutions with the requirements of this Law;
2. Develop and issue to the institutions concerned rules or guidelines for the implementation of this Law;
3. Have the authority to ask for production by reporting institutions of any information relevant to AML/CFT and exchange data with the institutions concerned;
4. Impose administrative sanctions on reporting institutions for non-compliance with this Law or refer them to the law enforcement institution concerned for appropriate sanctions;
5. Ensure compliance by reporting institutions with the training requirements of employees for AML/CFT purposes; and
6. Provide cooperation with foreign counterparts with respect to the exchange of information and other work related to AML/CFT.
Article 30 (Functions and powers of customs)
The customs shall, upon discovering cross-border travellers carrying currency, bearer negotiable instruments or precious metals and stones in excess of the prescribed threshold, request and obtain further information from him/her with regard to their origin and intended use.
Upon discovery of failure to declare or false declaration of the above-mentioned items, they shall seize or confiscate them. Information obtained and incidents occurred in this process shall be reported to the FIU.
Article 31 (Obligations and powers of law enforcement institutions)
Law enforcement institutions shall have the obligation and power to:
1. Detect and undertake investigations of predicate offenses, money laundering and financing of terrorism;
2. Identify and trace property subject to confiscation or suspected to be related to proceeds of crime;
3. Carry out provisional measures, such as freezing or seizing, to prevent any dealing, transfer or disposal of property subject to confiscation or suspected to be related to proceeds of crime;
4. Have the authority to require the FIU, reporting institutions and others concerned to produce information needed for investigation on predicate offenses, money laundering and financing of terrorism; and
5. Provide cooperation with foreign counterparts with respect to the exchange of information for investigative purposes concerning predicate offences, money laundering and financing of terrorism.
CHAPTER 5 INTERNATIONAL COOPERATION
Article 32 (Principles in international cooperation)
The State shall enhance cooperation with foreign countries and international organizations for AML/CFT purposes based on the principles of equality, mutual benefit and non-interference in internal affairs, and faithfully fulfil the obligations under the international treaties to which the DPRK is a party.
Article 33 (Institutions involved in international cooperation for AML/CFT purposes)
Cooperation with foreign countries and international organizations for AML/CFT purposes shall be undertaken by law enforcement institutions, the Financial Intelligence Unit, the Financial Supervisory Bureau and other competent institutions in accordance with domestic laws and international treaties concerned.
Article 34 (Types of international cooperation)
Law enforcement institutions, the Financial Intelligence Unit, the Financial Supervisory Bureau and other competent institutions shall strengthen cooperation with foreign countries for AML/CFT purposes through providing mutual legal assistance, freezing or confiscating property, extradition, exchange of information and others.
Procedures for and methods of international cooperation shall be provided in the domestic law and international treaties concerned.
CHAPTER 6 SANCTIONS AND COMPLAINTS
Article 35 (Property subject to freezing or seizuer, confiscation)
The following property shall be subject to freezing or seizure, and confiscation:
1. Laundered property;
2. Proceeds of, or instrumentalities used or intended for use in, money laundering or predicate offences;
3. Property that is the proceeds of, or used or intended for use in the financing of terrorism, terrorist organizations or individual terrorists; or
4. Property of corresponding value.
Article 36 (Freezing)
Upon determination that reasonable grounds exist that the property concerned is related to predicate offences, money laundering or financing of terrorism, the competent institution shall issue an order to freeze the property. In this case the property owner shall be simultaneously notified that his/her property has been frozen.
The freezing period shall not be more than ten days, and if the circumstances so require, may be extended, subject to the prescribed procedures, for twenty days.
Any person aggrieved with the freezing order may file complaints with the institution concerned within seven days of being notified of the freezing order.
Article 37 (Seizure and confiscation)
Seizure and confiscation shall be conducted in accordance with the provisions of the Criminal Procedure Law.
Article 38 (Administrative sanctions)
Administrative sanctions such as warning, suspension of license, deprivation of license, demotion, dismissal, fines, suspension of business or revocation of license shall, depending on the gravity, be imposed on the reporting institutions, supervisory and regulatory institutions and individuals in cases where they:
1. Failed to undertake CDD measures properly;
2. Failed to maintain customer identification data and transaction records as required;
3. Failed to fulfil their obligations in respect of large or suspicious transaction reports;
4. Failed to pay due attention to transactions falling under article 12 of this Law;
5. Provided services to customers falling under article 13 of this Law;
6. Failed to establish internal control system;
7. Refused to provide information required by the competent institution for the performance of its duties or provided false information;
8. Failed to execute the freezing order of the law enforcement institution concerned;
9. Refused to cooperate in or obstructed the law enforcement of the supervisory and regulatory institutions;
10. Failed to apply appropriate sanctions on violations of law discovered in the course of performance of duties;
11. Disclosed institutional or private secrets that came to their knowledge in the course of performance of duties; or
12. Conducted investigations or supervisions, or took freezing or seizure, and confiscation actions in violation of the law concerned.
Article 39 (Criminal liablility)
Where the violations of this Law constitute a crime, the person concerned shall be held criminally liable in accordance with the relevant provisions of the Criminal Law.
Article 40 (Complaints, settlement)
Any complaints in respect of AML/CFT shall be filed with the institution concerned.
The institution shall settle the complaints within thirty days of receipt thereof.