SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Sung Min Kim, Allen Hyungi Ryu and Joon Sung Hong, Lee & Ko
• The Act on Reporting and Using Specified Finan - cial Transaction Information – this act governs the anti-money laundering (AML) obligations of finan - cial institutions in South Korea, such as the obli - gations regarding suspicious transaction reports, currency transaction reports, know your customer (KYC) and other matters relating to internal control. • The Act on Regulation and Punishment of Criminal Proceeds Concealment – this act governs matters regarding: (a) concealment of criminal proceeds related to particular crimes; and (b) confiscation of such criminal proceeds. • The Act on Prohibition Against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction (“CFT/WMD Act”) – this act governs matters relating to: (a) the financing of terrorism against the public; and (b) the financing of proliferation of weapons of mass destruction. • The Act on Special Cases Concerning the Preven - tion of Illegal Trafficking in Narcotics – this act governs matters relating to narcotics-related activi - ties and the confiscation of proceeds from such activities. 3.3 Sanctions, National Security and Foreign Investment Controls Industries subject to certain foreign investment restric - tions include the following: • prohibited industries – nuclear power generation, radio broadcasting, terrestrial television broadcast - ing and postal services; • less than 50% foreign ownership permitted – farm - ing of beef cattle, wholesale of meat products, domestic and international passenger and cargo transportation by sea and air, newspaper publica - tion, magazine and periodical publication, etc; • less than 50% foreign ownership (where a South Korean national is the largest shareholder) permit - ted – power generation, power grid and electricity sales business; • 49% or less foreign ownership permitted – pro - gramme distribution, cable television networks, satellite and other broadcasting, wired/wireless
telecommunications and other telecommunications business; and • less than 25% foreign ownership permitted – news agency businesses. Furthermore, any investment that may pose a threat to the national security of South Korea (in particular, any investment that might hinder the manufacture/produc - tion of defence materials, might pose a risk of leakage of state secrets and/or national core technology, etc) may be prohibited or restricted by the MOTIE upon review of the foreign investment committee. Under the current FIPA, only direct investments by foreign investors are subject to regulatory review. However, the proposed amendment to the FIPA expands the scope of national security review to include cases where the foreign investor controls a South Korean entity through a foreign-invested company. National Core Technology In the event that any technology owned by an investee company is deemed a “National Core Technology”, as defined under the Act on Prevention of Leakage and Protection of Industrial Technology, the following applies: • if the investment target has received any govern - ment subsidies for R&D, an approval by the MOTIE prior to closing will be required; and • if the investment target has not received any such government subsidies, a report to the MOTIE prior to closing will be required. Technically, the MOTIE is required to notify the appli - cant within 45 days from the date of receipt of the application. However, this review period is often delayed beyond the 45-day period as the MOTIE can conduct a technology examination if deemed neces - sary for certain national core technologies, and the examination is not included within the 45-day review period. Sanctions South Korea has implemented international economic, financial and trade sanctions as required by the United Nations Security Council Resolutions (UNSCR) and other international treaties to which it is a party. South Korea has also incorporated into its domestic regime
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