Government Launches Joint Investigation Team for Recovery of Overseas Illegal Assets

June 25, 2018

Supreme Prosecutors' Office

The Republic of Korea

Summary

The National Tax Service, Korea Customs Service, Financial Supervisory Service, Korea Deposit Insurance Corporation, Korea Financial Intelligence Unit, and Public Prosecutors’ Office launched the “Joint Investigation Team for Recovery of Overseas Illegal Assets” on June 22. The joint investigation team is responsible for investigating tax evasion through illegal concealment and flight of assets to other countries, and recovering overseas illegal assets.

The agencies participating in the new investigation team will make concerted efforts to trace and recover assets illegally siphoned off overseas, levy the appropriate tax on assets moved offshore for tax evasion, impose appropriate criminal punishment on serious crimes and fully recover the proceeds of crime.

Background

As money-laundering crimes and concealment of criminal proceeds have become more and more globalized and intelligent, many cases of concealing overseas assets using tax havens or flying domestic assets to overseas countries have been identified, raising the serious problem of draining national wealth.

As flying and concealing assets overseas have been conducted through international transactions in a professional and organized way with the support of experts, it is difficult to discover and eradicate them by the effort of a single agency.

Therefore, the National Tax Service, Korea Customs Service, Financial Supervisory Service, Korea Deposit Insurance Corporation, FIU, and Public Prosecutors’ Office decided to establish and operate the “Joint Investigation Team for Recovery of Overseas Illegal Assets” under the Supreme Prosecutors' Office, to remove the “partition between agencies” and cooperate actively and closely.

The establishment of the Joint Investigation Team was instructed at the chief aids meeting presided over by the President on May 14. Accordingly, the six agencies established a working group and launched the Joint Investigation Team.

Establishment and operation of Joint Investigation Team

Participating Agencies

The team is composed of experts on offshore tax evasion, money laundering, and recovery of criminal proceeds of the National Tax Service, Korea Customs Service, Financial Supervisory Service, Korea Deposit Insurance Corporation, FIU, and Public Prosecutors’ Office.

Operation of Investigation Team

Participating agencies in the Joint Investigation Team trace and investigate assets hidden overseas through close cooperation. When specific circumstances of offshore tax evasion, flight of domestic assets, or offshore money-laundering are identified, the participating agencies proceed with the imposition of tax, investigation, and recovery of criminal proceeds in a consistent manner.

If it is necessary to ly go through the process among agencies, the team will fast track investigation by dramatically reducing the time used for the imposition of tax, criminal punishment, and recovery of criminal proceeds.

Also, the team plans to use information obtained through global networks of participating agencies and actively cooperate with international agencies such as the Financial Action Task Force (FATF).

After the preparation process, the Joint Investigation Team office was established in the Gwacheon Government Complex and started its activities on June 22.

Major Investigation Targets

① Offshore tax evasion to conceal overseas assets and income using tax havens

② Flight of domestic assets to other countries using paper companies, in violation of the Foreign Exchange Transactions Act and Foreign Trade Act

③ Creation, concealment and flight of overseas secret funds of companies through manipulation of import and export prices and overseas fake transactions, and related embezzlement and breach of trust

④ Violation of the Act on the Regulation and Punishment of Criminal Proceeds Concealment by transferring assets overseas to conceal the proceeds of crime

Institutional Improvement

The team plans to research and review ways to improve laws and regulations to ly and effectively discover and respond to acts such as offshore tax evasion, flight of domestic assets, and concealment of criminal proceeds, using the cooperative system of the concerned agencies. It will also seek to create the measures to encourage the voluntary report of overseas assets and income to bring the underground economy to light.