Policy
Currency Transaction Report (CTR) is a system under which financial institutions and casinos ("reporting entities") are required to report to the KoFIU all cash transactions above a designated threshold.
Reporting entities are required to report objective information such as the identity of trader, date of transaction, transaction volume etc and others electronically to KoFIU when the amount of cash paid or received in all transactions conducted with in one trading day under the same name at the same financial institution is above a threshold, which is currently set at KRW 10 million. It varies from the Suspicious Transaction Report (STR) that relies on the expertise and subjective judgment of employees at reporting entities.
Korea implemented a new Currency Transaction Report (CTR) system on January 18, 2006, with the threshold starting at 50 million won.
The threshold has been lowered gradually since then, to 30 million won in 2008, 20 million won in 2010, and 10 million won in July 2019.
CTR aims to efficiently block the movement of illicit activity and abnormal financial transactions suspected to be involved in money laundering by requiring to report currency transaction above designated threshold, based on objective criteria.
CTR requirement is introduced as the majority of money laundering activity that attempts to disguise and conceal the source of fund accompanies large amount of currency transaction, and to supplement the limits of STRs, given the fact that it is barely possible to detect illegal funds without the report from financial institutions.
CTR system is adopted partly in the international community, depending on each nations’ situation. However, with the official recognition of the effectiveness of CTR from FATF, AML-related international bodies are strongly recommending to adopt CTR. Korea adopted CTR as voices calling for adoption grew, particularly considering high cash usage rate, and now it plays critical role in our AML regime.
CTR has been adopted by leading nations starting from the US, and Australia, Canada etc., but now it is being implemented by growing number of nations, for instance, Taiwan, Guatemala, Slovenia, Panama, Colombia, Venezuela, and others.
Almost all financial institutions, such as banks, securities companies, insurance companies, etc. are subjected to reporting in most nations. Reporting threshold varies by countries, as each decides the threshold based on their domestic currency usage tendency and range, but major countries, e.g., US, Australia, Canada, have set the threshold at $10,000 (respective domestic dollar).
To prevent the evasion of CTR committed through split transaction, each nations have put requirements in place that mandates to report to the FIU when the sum of transactions made in the designated period exceeds the threshold.
Also, US and Canada are operating reporting exemption system where transactions with government agencies or financial institutions that pose low ML risk can be exempted, to reduce reporting related costs and reinforce the effectiveness of the data. On the contrary, Korea has adopted ‘designated exemption approach’, under which exempted entities are stipulated by law (FTRA Article 4-2) and their reporting is exempted accordingly.
| Country | Designated Threshold | Reporting Entities |
|---|---|---|
| US | USD 10,000 or more | Banks, Securities Broker and Dealer, Finance Service Providers, Casinos, etc. |
| Canada | CAD 10,000 or more | Banks, Trust Companies, Life Insurance Companies, Securities Dealer, Foreign Exchange Service Providers, Accountants, Real Estate Companies, Casions, etc. |
| Australia | AUD 10,000 or more | Banks, Insurance Companies and Insurance Agent, Financial Service Providers, Trust Companies, Laywers/Law Firms, Casions, etc. |
CTR provision notification system requires KoFIU to notify the account holder on the overview of provided transaction information, purpose of provision, provided personnel and and the date of provision within 10 days since providing CTR to LEAs under their request in accordance with FTRA.
* Act on Reporting and Using Specified Financial Transaction Information, Article 10-2(notification of specified transaction information provision)
① The Commissioner of the Korea Financial Intelligence Unit shall notify the account holder through the designated standard format when information reported by financial institution pursuant to Article 4-2 (except information as Article 10-1(3)) were provided to Chief of Prosecutors’ Office under Article 10 within 10 days from the day of provision (when notification was suspended pursuant to clause 2 or 3, from the day when suspension ends), regarding the overview of provided transaction information, purpose of provision, provided personnel and and the date of provision, etc.
ㅇ Notified Individual/Entity: Account Holder (trader or service provider) under Article 10-2 of FTRA
ㅇ Notification Channel: Electronic Notification through National Secretary Service, Registered Mail
ㅇ Notification Process
1. National Secretary Service
- (KoFIU) When those subjected to notification is a member of National Secretary Service, and has consented to receive ‘CTR provision notification’ service, KoFIU sends the notification to their mobile.
- (Notified Individual/Entity) When CTR Provision Notification appears on KakaoTalk, Naver App, etc., click [Read More] to open, verify identity, and then ‘Detailed CTR Provision Notification’ will be available online.
2, Registered Mail
- When those subjected to notification did not join National Secretary Service or did not read the (electronically) provided notification, KoFIU sends the given document via registered mail.