SOUTH KOREA Law and Practice Contributed by: Jeena Kim, Sodam Kim and Bochan Kim, Bae, Kim & Lee LLC
• there is a reasonable ground to suspect that the property received in connection with a financial transaction is illegal property; • there is a reasonable ground to suspect that the counterparty to a financial transaction is engaging in an illegal financial transaction including money laundering or the financing of terrorism; or • a report has been made to the competent investi - gative authority by an employee of a financial insti - tution in accordance with the Anti-Terrorism Act. Otherwise, there is no general legal obligation to self- report in relation to sanctions enforcement. 3. Recent and Future Legal Developments 3.1 Significant Court Decisions or Legal Developments Please refer to 1.2 Key Trends regarding the expan - sion of export control items and 2.2.4 Criminal Enforcement Action regarding the judgments con - cerning sanctions. 3.2 Future Developments The Anti-Terrorism Act has been amended to expand the application of financial‑transaction restrictions to downstream subsidiaries as follows. Article 4 (9) of the Anti-Terrorism Act states that “[…] the term ”owning or controlling corporation” means any corporation in which an individual, corporation, or organisation involved in the proliferation of weap - ons of mass destruction – or a person designated as subject to financial‑transaction restrictions – directly or indirectly contributes or owns 50 percent or more of the total contributed assets, total issued shares, or total equity interests, or any corporation that in fact exercises influence, as prescribed by Presidential Decree.” Although the Enforcement Decree of the Anti-Terror - ism Act has not yet been enacted to provide detailed guidance on implementation, the Financial Services Commission issued a draft partial amendment to the Enforcement Decree for public comment on 19 March 2025. Under the draft amendment, a sanctioned per -
son will be deemed to exercise de facto control over a subsidiary if any of the following conditions are met (Article 2-2 of the draft decree): • the sanctioned person can exercise more than half of the voting rights in the company; • the sanctioned person appoints a majority of the company’s representatives, managing partners, or officers; • the sanctioned person can, in practice, influence the composition of the company’s leadership or the management of its funds or assets; or • in any other case where the sanctioned person is deemed to exert substantial influence over the company’s major business decisions. If enacted, the draft decree would expand the scope of entities subject to sanctions compliance obliga - tions. In effect, companies will need to assess not only their direct dealings with sanctioned persons but also their relationships with subsidiaries or affiliates over which such persons may exercise de facto control. The Anti-Terrorism Act and its Enforcement Decree outline the following process to object to a designa - tion by the Financial Services Commission as a per - son subject to restrictions on financial transactions. • A designated person may file an objection regard - ing the designation with the Financial Services Commission or the refusal of permission for financial transactions within 30 days from the date they become aware of their designation or the date of a rejection of their application for approval of financial transactions. The objection must include the applicant’s identity, details of the designation, reasons for the objection, and the date of designa - tion (Article 4-2 (1) of the Anti-Terrorism Act, Article 3 (2) of the Enforcement Decree). (a) If the Financial Services Commission decides to uphold the objection, it will immediately rescind the designation or revoke the refusal of permission for financial transactions and shall 4. Delisting Challenges 4.1 Process
158 CHAMBERS.COM
Powered by FlippingBook