SOUTH KOREA Law and Practice Contributed by: Hyun Ho Eun, Jung-Chull Lee and Dukjoong Na, Kim & Chang
GRAC effectively enforces this spending limit by refusing to assign a rating to games that exceed such threshold (and thus, applicable games cannot be launched in Korea). Finally, web-board games can be offered for fees, but the operation of Web-Board Games remains subject to strict regulations under GIPA. For instance: • a user is only allowed to spend up to KRW700,000 in the game per month (ie, monthly limit); • the maximum in-game currency a user may spend in a single game round is KRW70,000 (ie, per-round limit); • automatic betting is prohibited; and; • selecting a counterparty in any game is prohibited to prevent users from illegally transferring in-game currency in a manipulative manner through match- fixing. Web-board game regulations are subject to re-exami- nation every two years but, so far, the regulations have not been dramatically amended due to the regulators’ concerns about speculation. 7.2 Gambling Management Tools As mentioned in 2.1 Online Gambling , in principle, online gambling with a “speculative” nature is prohib- ited. See 7.1 RG Requirements regarding game-relat- ed management tools that do not fall under specula- tive online gambling. The Financial Services Commission (FSC) considers illegal gambling and speculative activities as major threats to financing in South Korea. General South Korean AML legislation applies to the gambling sector. The key pieces of AML legislation are: • the Act on Reporting and Using Specified Financial Transactions Information (FTRA); • the Act on Regulation and Punishment of Criminal Proceeds Concealment (POCA); and 8. Anti-Money Laundering (AML) 8.1 AML Legislation • the Act on Prohibition Against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction (TFA).
The FTRA regulates money-laundering activities car- ried out by way of financial transactions by estab- lishing a reporting scheme to enable the analysis of certain information relating to financial transactions. The Korea Financial Intelligence Unit (KoFIU) was established as the primary national agency responsi- ble for the regulation of AML operations and the con- trol of suspicious transactions in order to effectively implement the AML system. The KoFIU is also respon- sible for establishing AML policies, the implementa- tion of such policies, and the education of subject entities. 8.2 AML Requirements Obligations under the FTRA apply to casino opera- tors, as well as financial institutions, electronic finan- cial business operators (eg, money transmitters, payment gateway service providers, and issuers of prepaid electronic payment means) and certain loan business operators. Under the FTRA, the above entities are required to: • designate persons responsible for the report- ing and the establishment of an internal reporting system; • prepare and implement procedures and work guidelines with which the management and the employees shall comply, while discharging their duties to prevent money laundering and the financ- ing of terrorism; and • educate and train the management and the employees to prevent money laundering and the financing of terrorism. There are also reporting requirements under the FTRA and the following cases must be reported without delay to the KoFIU: • where there are any reasonable grounds to sus- pect that an asset given or received in relation to a financial transaction is illegal; • where there are any reasonable grounds to sus- pect that the other party to a financial transaction engages in money laundering, such as engaging in the financial transaction with a borrowed name;
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