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AML Regime

Confiscation of Criminal Asset

All economic benefit acquired from illicit activities must be deprived to remove the fundamental economic factor that promotes specific crimes. Hence, FATF Recommendation 3 requires countries to criminalilze money laundering on the basis of the Vienna Convention and the Palermo Convention, which refers to measures that allow confiscation of laundered asset, benefits acquired from money laundering, tools that are used or anticipated to be used in money laundering, or assets equivalent to the value of such proceeds.

However, confiscation rules stated in criminal law (Criminal Act Article 48-1(2) and (3)) limits the extent of confiscation to assets derived and acquired from, or required in return to criminal activities. This not only makes it difficult to execute stern confiscation, but also falls short to the international standards. The Proceeds of Crime Act(POCA) is enacted to address such shortcomings, which consists of Article 8 (confiscation of criminal proceeds) and Article 9 (requirements for confiscation), further enhancing the confiscation regime on specific crimes.

In addition, as Korea does not acknowledge substitute property confiscation regime that replaces confiscation of specific asset by confiscating equivalent amount, we established Article 10 on additional collection in the POCA to achieve same goal in Korea’s legal system.

The POCA Article 8 stipulates confiscation as supplementary punishment to specified crime in Article 2, concealment of criminal proceeds in Article 3, giving and receiving proceeds in Article 4. To confiscate ill-gained proceeds accordingly, prosecution and conviction on specific crimes or money laundering crimes must precede. Article 8-1 states that regardless of its link to ML-related crimes, criminal proceeds, any property derived from criminal proceeds, and criminal proceeds related to money laundering activity as those subjected to confiscation.

Article 9 on the requirements for confiscation stipulates that confiscation prescribed in Article 8(1) shall be limited to cases where the property subjected to confiscation or mixed property does not belong to any person other than a criminal: provided, that where a person other than a criminal knowingly acquires the mentioned property subject to confiscation or mixed property after such crime has been committed, the mentioned property may be confiscated even though it belongs to a person other than a criminal. However, where any property on which the superficies, hypothec, or any other right exists is to be confiscated pursuant to Article 8 (1), such right shall be left to stand as if any person other than the criminal had acquired such right before the commission of the offense or has unknowingly acquired such right after the commission of the offense.

Where it is impracticable to confiscate the property under the provisions of Article 8 (1) or where it is deemed inappropriate to confiscate the property in light of the nature of such property, the conditions of its use, the existence of a right of any person other than the parties to the offense to such property, or other circumstances, the monetary equivalent to the value of such property may be collected from any of the parties to the offense.

When a foreign country has requested cooperation in relation to a foreign criminal case against an act falling under specific crimes and the crimes referred to in Articles 3 and 4 of this Act in the execution of a finally-binding adjudication of confisscation or collection of equivalent value or in the preservation of property for the purpose of confiscation or collection of equivalent value, mutual assistance may be provided except designated cases (Article 11).

Besides, regarding criminal proceeds related to narcotics offense, the Act on Special Cases concerning the Prevention of Illegal Trafficking in Narcotics shall apply mutatis mutandis to the confiscation and collection of equivalent value, and international cooperation pursuant to this Act.


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