The government should collect and manage the BO information
Ji-yeal Chung (KEB Hana Bank)
TI-Korea: Where do you think the relevance of Beneficial Ownership Transparency is situated?
Chung Ji-yeal: The beneficial owner (defined as the real owner in Korea’s specific financial information law) of the ‘Blue K’ company, in the ‘2016 Choi Sun-sil Profiteering Scandal’, was not the legal representative Go Young-tae but Choi Sun-sil. Many companies use borrowed names to hide the real owners’ identities to engage in tax evasion and avoid the law. Due to such problems, improving the transparency of beneficial owners is an essential attribute to practice economic justice and promote social justice.
TI-Korea: What does it mean for Korea if the beneficial owners are made transparent?
Chung Ji-yeal: As I mentioned above, improving the transparency of beneficial owners is an essential aspect of Korea’s economic and social justice practice. This way, we can say that we are practicing the saying “Where there is a profit, there is a tax.”
TI-Korea: What do you think is the most important method in addressing the borrowing of name issue in South Korea?
Chung Ji-yeal: The problem of borrowing people’s name is very serious, and they should be more aware of the borrowed accounts issue. For the sake of small financial gain, ‘providing your valuable account for voice phishing and using a borrowed name as a tool to launder money’ is similar to ‘selling a kitchen knife to a robber who intends to murder’ (somebody). Lending your account is like providing a weapon to a criminal.
TI-Korea: What do you think would be the top priority to deal with the borrowed names of beneficial ownership information?
Chung Ji-yeal: I think the state should handle the beneficial ownership information issue and give the information to finance companies and related economic institutions. Similar to some European countries, I think the ‘court’ should make it an obligation for the beneficial owners to register and set up a database (DB) that will disclose the related information to the public.
Alternatively, I think it is necessary to make the National Tax Service disclose information, such as the submitted stockholder change statement (receipts) of the company; trust details related to the inheritance so that financial institutions can identify the real beneficial owners when doing the Customer Due Diligence work.
TI-Korea: Briefly, how do you evaluate the current beneficial ownership verification by financial institutions being implemented in South Korea?
Chung Ji-yeal: As aforementioned, the state should provide the beneficial ownership information, but the collecting and managing obligations of beneficial ownership information are imposed on private companies. This results in unnecessary conflicts between the financial institutions’ clients and financial companies and shifts the concomitant economic burden to the private companies, including the computation costs and staff training when dealing with the customer’s beneficial ownership information.
TI-Korea: What do you think is the greatest obstacle when dealing with the borrowed names of the beneficial ownership information in South Korea?
Chung Ji-yeal: I think it is a challenge for the legislation. It would be the biggest obstacle for Korea’s current anti-money laundering prevention system that the government’s legislative actions on beneficial ownership (BO) have not progressed at all including handling the Politically Exposed Persons (PEPs), such as Korean high-ranking officials as recommended by Financial Action Task Force (FATF); managing the Designated Non-Financial Businesses and Professions (DNFBPs), including lawyers, and providing the beneficial ownership information which the government holds.
[Profile]
Ji-yeal Chung, Director of KEB Hana Bank, Money Laundering Prevention Department
Chair, Korean Association of Anti-Money Laundering Specialists
Consultant, the Reg Tech Forum of Financial Supervisory Service
Professor, Korean Banking Institute