Concealment of Criminal Proceeds

The 「Act on Regulation and Punishment of Concealment of Criminal Proceeds」 strongly regulates the acquisition, disposition, disguise, concealment, and receipt of criminal proceeds arising from serious crimes, as well as breaches of the related reporting obligations.

The unlawful conduct contemplated by this Act is not merely the physical state of holding illicit funds.

Its purpose is to deter the entire course of conduct by which such funds are transferred to another person or laundered through complex financial transactions so as to appear to be ordinary business income.

For the offense of concealment of criminal proceeds to be established in law and lead to punishment, the following specific elements must be strictly proven during the investigation.

This is conduct that acquires property arising from a specified crime in another person's name rather than one's own, or transfers it to a third party, thereby obscuring the chain of ownership and the source.

It is one of the most frequent money laundering methods used to hide the property's inherently unlawful character and to evade tracing by investigative authorities.

This is conduct that disguises unlawfully obtained proceeds as lawful property in order to conceal them.

Converting funds to cash and hiding them, or disguising and holding them as the revenue or investment of a legitimately operating business, in order to evade seizure by investigative authorities or confiscation by the court, also constitutes concealment of criminal proceeds.

This is conduct that takes property while aware of circumstances indicating that another person formed it by unlawful means.

It covers not only receiving the property gratuitously without consideration but also acquiring it for payment under the guise of a normal transaction.

That said, where the conduct is the proper performance of a duty required by law, or where a contractual obligation is performed in good faith without knowledge of the source of the funds, there may be room to treat it as an exception.

This is conduct in which a person employed by a financial company or related institution, having discovered in the course of duty funds or transactions strongly suspected to be criminal proceeds, fails to report them to the competent investigative authority without delay.

Disclosing to the transaction party or other interested persons, in secret, an intention to report or the fact that a report has been made is also regulated as a separate violation.

The specific levels of punishment for each violation set out in the Act on Regulation and Punishment of Concealment of Criminal Proceeds are as follows. An individual or a company named as a suspect may bear heavy criminal liability.

Where a representative of a corporation, or an agent, employee, or worker of the corporation or individual, commits a violation in connection with the business of that corporation or individual, the joint penalty provision for concealment of criminal proceeds allows a fine to be imposed not only on the actual offender but also on the corporation or individual proprietor.

This holds them accountable for lax internal controls.

However, where it is objectively proven that the corporation or individual did not neglect reasonable care and supervision over the business in order to prevent the violation, they may be excluded from the imposition of a fine.

The main aggravating and mitigating factors the court considers in setting the sentence during a criminal trial are as follows.

▶ Mitigating Factors

▶ Aggravating Factors

Working from extensive financial transaction records, investigators focus closely on the flow of funds and on whether the person acted with intent.

Flatly denying the allegations while still short on information, or giving inconsistent statements and then reversing them, undercuts your credibility and creates an unfavorable picture.

If you genuinely believed the transaction was legitimate and had no knowledge that the funds were illicit, you should gather the contracts, transfer records, and emails or messenger logs relating to work instructions that support this, and present a coherent account.

If the facts instead make the charge difficult to escape, the sensible course is to acknowledge promptly what can be acknowledged rather than mount an untenable denial, while building a practical strategy to satisfy the mitigating factors under the sentencing guidelines discussed above.

When a corporation or business owner is investigated under the joint penalty provision, it must show that the unlawful act stemmed from an individual employee's own deviation.

At the same time, management must seek exemption by submitting evidence that establishes it fulfilled its duty of reasonable supervision, such as rigorously implementing a compliance management program and conducting regular employee training, and it must present that evidence in a coherent manner.

Systematic evidence gathering is indispensable to prove the harm from concealment of criminal proceeds and to trace where the hidden funds have gone.

You should preserve, without damaging the originals, the route by which the funds first moved, any falsified contracts, the complex account transfer records, and recordings or logs of calls and conversations with the offender or third parties.

When you then file the criminal complaint, it is important to set out the dates, places, and methods of the conduct in a clear and logical sequence so that investigators can quickly grasp and trace the overall flow of the money laundering.

While the criminal trial of the offender is underway, the victim may apply to the court for a compensation order to obtain an enforceable title for the amount of the loss.

If the investigation then identifies property that the offender diverted under a third party's name or converted to cash and hid, the victim should promptly file a civil claim for damages against it.

To keep that property from being further disposed of during the suit, the victim should also consider making active use of preservative measures such as provisional attachment or a provisional injunction, which improve the prospects of an actual recovery.

For an individual or a single company, accurately tracing a vast, tangled flow of funds and contesting the question of intent against the meticulous logic of investigators is no easy task.

Concealment of criminal proceeds cases are especially likely to move forward with several proceedings interlocking at once, including the criminal determination, civil compensation, and corporate liability under the joint penalty provision.

The direction in which the defense theory is set early on, and which procedures are taken up first, can therefore produce wide variation in the result that ultimately follows.

Simply organizing an objective view of how much risk your current situation carries against the legal standards can help head off serious disadvantages that may arise later.

At Daeryun Law Firm, attorneys with accumulated experience across criminal, civil, and corporate law work together to diagnose the situation so that the complex structure of the case is understood and a stable direction is set.

Given that fund-tracing cases turn on analyzing extensive documents and data, we also draw on artificial intelligence to analyze the law and precedents, allowing us to develop response strategies from similar cases quickly.

We work with our Evidence Investigation Center and Digital Forensics Center to secure the integrity of the evidence and pin down the issues, concentrating on proving the objective facts.

Built on this structure, in which multiple attorneys examine a single case from several angles and discuss it to set an integrated direction, we approach the proceedings steadily from the outset.

If you need a multifaceted, systematic review of your situation and a legal assessment, one option is to use 🔗Criminal Defense Attorney Legal Consultation Booking to hold an in-depth consultation with an attorney experienced in handling related cases and to look for a safe way forward.