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ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM

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ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM

Act No. 8697, Dec. 21, 2007

Amended by Act No Act No. 8863, Feb. 29, 2008

Article 1 (Purpose)

The purpose of this Act is to provide for matters necessary for prohibiting the financing of terrorism to implement the International Convention for the Suppression of the Financing of Terrorism. Article 2 (Definitions)

The definitions of terms used in this Act are as follows:

1. The term "funds for terrorism against the public (hereafter referred to as "funds for terrorism")" means funds or assets collected, provided, transported or kept to be used for an act falling under any of the following items, for the purposes of interfering with the State, a local government or a foreign government (including a foreign local government, or international organization established by treaty or other international convention) in exercising its rights or forcing it to perform an non-obligatory act, or threatening or endangering the public:

(a) Murder, injuring human body part that may result in death, or illegal arrest, confinement, abduction, enticement or taking hostage;

(b) An act related to an aircraft (referring to an aircraft pursuant to subparagraph 1 of Article 2 of the Aviation Act; the same applies hereinafter in this item), falling under any of the following subitems:

() Crashing, overturning or destroying an aircraft during flight (referring to flight, as referred to in subparagraph 1 of Article 2 of the Aviation Safety and Security Act; the same applies ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM 2

hereafter in this item), or causing sufficient damage to harm the safety of an aircraft during flight;

() Hijacking, or forcing the operation of an aircraft during flight by assault, intimidation or other means; and

() Damaging, or interfering with the operation of aviation facilities related to the operation of an aircraft, so as to harm the safety of an aircraft;

(c) An act related to a ship (referring to a ship pursuant to subparagraph 1 of Article 2 of the Act on Punishment for Damaging Ships or Offshore Facilities; the same applies hereinafter in this item) or an offshore facility (referring to an offshore facility pursuant to subparagraph 5 of Article 2 of the same Act; the same applies hereinafter in this item), falling under any of the following subitems: () Destroying a ship during its operation (referring to operation as referred to in subparagraph 2 of Article 2 of the Act; the same applies hereafter in this item) or an offshore facility, or causing sufficient damage to harm the safety of a ship during its operation, any offshore facility or freight stowed thereon; () Hijacking, or forcing the operation of a ship by assault, intimidation or other means; and

() Destroying, causing major damage to, or impairing the functions of equipment or facilities related to the operation of a ship, so as to harm the safety of the ship during operation; (d) Loading or exploding explosives or incendiary arms or devices, which were produced, or are sufficiently powerful to kill, critically injure or cause major damage, or using them in other ways on any of the following vehicles or facilities:

() Public vehicles that are used for transporting humans or goods, such as trains, streetcars, automobiles, etc.;

() Facilities or roads used for vehicle traffic falling under subitem (), parks, stations, or other public facilities;

() Facilities to supply electricity or gas, drinking water supply for the public, other facilities or facilities for telecommunications provided to, or used by the public; () Processing, transporting or storing facilities to produce or refine raw materials of petroleum, flammable gas, coal or other fuel, ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM 3

or process them into fuel; and

() Structures, aircraft or ships, which the public may access, excluding facilities referred to in subitems () through (). (e) An act related to nuclear materials (referring to nuclear materials pursuant to subparagraph 1 of Article 2 of the Protection of Nuclear Facilities, etc. and Prevention of Radiation Disasters Act; hereafter the same applies in this item), radioactive materials (referring to radioactive materials pursuant to subparagraph 5 of Article 2 of the Atomic Energy Act; hereafter the same applies in this item) or nuclear facilities (referring to nuclear facilities pursuant to subparagraph 2 of Article 2 of the Protection of Nuclear Facilities, etc. and Prevention of Radiation Disasters Act; hereafter the same applies in this item), falling under any of the following subitems; () Killing a human, injuring a body part or property, or endangering other public safety by destroying a nuclear reactor; () Endangering human life or body part by wrongfully using radioactive materials, a nuclear reactor or facility related thereto, a nuclear fuel cycle facility, a radiation generator, etc.;

() Receiving, carrying, possessing, storing, using, transporting, altering, disposing of or dispersing nuclear materials; and () Destroying or damaging nuclear materials or a nuclear facility, or causing such, or interfering with the normal operation of a nuclear facility, resulting in discharge of radioactive material or radiation leak; and

2. The term "financial transaction" means a financial transaction pursuant to subparagraph 2 of Article 2 of the Act on Report on, and Use of Specific Financial Transaction Information. Article 3 (Application to Foreign Exchange Transactions or Foreigners) (1) This Act shall also apply to cases falling under any subparagraph of Article 2 (1) of the Foreign Exchange Transactions Act. (2) This Act shall also apply to persons falling under any of the following subparagraphs:

1. A foreigner (including a person without citizenship; the same applies hereafter) who has committed a crime referred to in Article 6 (1) outside Korean territory to damage a Korean public institution, such as an embassy abroad, or a facility thereof, or harm Korean citizens; ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM 4

and

2. A foreigner who has committed a crime referred to in Article 6 (1) outside Korean territory and is in Korean territory. Article 4 (Designation as Restricted Person in Financial Transactions and Restriction of Financial Transactions, etc.)

(1) If an individual, corporation or organization is deemed related to the financing of terrorism and a case falling under any of the following subparagraphs, the Financial Services Commission may designate the individual, corporation or organization as a person restricted in financial transactions, and publicly announce such designation:

1. Where restriction of the financing of terrorism is necessary for complying with treaties to which Korea is a party, or generally accepted international laws in good faith; and

2. Where restriction of the financing of terrorism is necessary for especially contributing to international efforts to sustain international peace and security.

(2) The Financial Service Commission shall have prior consultation with each of the following persons, when intending to designate and publicly announce a restricted person in financial transactions:

1. The Minister of Justice; and

2. The Minister of Foreign Affair and Trade. (3) If a person who has been designated, and publicly announced as a person restricted in financial transactions pursuant to paragraph (1) intends to make a transaction with a financial institution, etc. (referring to a financial institution, etc. as referred to in subparagraph 1 of Article 2 of the Act on Report on, and Use of Specific Financial Transaction Information; the same applies hereafter) and payment or receipt therefrom, the Financial Services Commission may grant him/her permission, in accordance with Presidential Decree. In such cases, the authority of the Financial Services Commission to grant permission may be entrusted to the Governor of the Bank of Korea.

(4) When a person who has been designated, and publicly announced as a person restricted in financial transactions pursuant to paragraph (1) is no longer related to the financing of terrorism, the Financial Services ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM 5

Commission shall revoke such designation, and publicly announce it. In such cases, paragraph (2) shall apply muntandis muntatis to the revocation of designation as a person restricted in financial transactions.

(5) Any person who is dissatisfied with any of the following dispositions may raise an objection in accordance with Presidential Decree:

1. Designation as a restricted person in financial transactions pursuant to paragraph (1); and

2. Denial of permission pursuant to paragraph (3). Article 5 (Duties of a Financial Institution, etc. and its Employees) (1) No financial institution, etc. (including its employees) may conduct a financial transaction, nor payment or receipt therefrom, with a person who has been designated and publicly announced as a person restricted in financial transactions under Article 4 (1), except for cases where permission is granted under Article 4 (3).

(2) When an employee of a financial institution, etc. notices that assets received from a financial transaction are funds for terrorism, or the other party in a transaction is making a transaction or payment or receipt therefrom without permission referred to in Article 4 (3) or is committing a crime referred to in Article 6 (1), he/she shall report it to the competent investigative authority, notwithstanding other Acts or subordinate statutes.

(3) Where an employ intends to file, or has already filed a report pursuant to paragraph (2), he/she may not disclose such fact to any other person, including the other party to the relevant financial transaction: Provide, That this may not apply, if the financial institution provides such information to prevent the financing of terrorism. Article 6 (Penal Provisions)

(1) A person falling under any of the following subparagraphs shall be imprisoned with prison labor for 10 years or less or fined 100 million won or less:

1. A person who has raised, supplied or transported funds or assets, knowing that they were to be used for terrorism; and

2. A person who has forced or persuaded another person to raise, supply or transport funds or assets, that they were to be used for terrorism. (2) A person falling under any of the following subparagraphs shall be ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM 6

imprisoned with prison labor for three years or less or fined 30 million won or less:

1. A person who has made a financial transaction, or payment or receipt therefrom, upon obtaining permission pursuant to Article 4 (3) by false or other illegal means;

2. A person who has made a financial transaction, or payment or receipt therefrom, without permission pursuant to Article 4 (3); and

3. An employee who has conducted a transaction in violation of Article 5 (1).

(3) Any person falling under any of the following subparagraphs shall be imprisoned with prison labor for two years or less, or fined 10 million won or less:

1. A person who has failed to file a report to the competent investigative authority, in violation of Article 5 (2);

2. A person who has disclosed the filing of a report, in violation of Article 5 (3).

(4) A person who has attempted a crime falling under subparagraph 1 of paragraph (1) shall be punished.

(5) A person who has committed a crime falling under paragraphs (1) through (3) may be punished by both imprisonment with prison labor and a fine.

(6) Where a representative of a corporation, or an agent, employee or other worker of a corporation or individual has committed a violation referred to in paragraphs (1) through (3), not only the violator, but the corporation or individual shall also be fined pursuant to each paragraph relevant to the violation.

Article 7 (Fines for Negligence)

(1) Twenty thousand won shall be imposed on a financial institution, etc. As a fine for negligence (limited only to cases where its employee has violated paragraph (1) of the same Article inadvertently) that has conducted a transaction in violation of Article 5 (1); (2) A fine for negligence referred to in paragraph (1) shall be imposed and collected by the Financial Services Commission in accordance with Presidential; Decree. (3) A person who is dissatisfied with the disposition of a fine for negligence pursuant to paragraph (2) may raise an objection to the Financial Services ACT ON PROHIBITION AGAINST THE FINANCING OF TERRORISM 7

Commission within 30 days after the date of receipt of such notification.

(4) Where a person who is subject to the disposition of a fine for negligence under paragraph (2) has raised an objection under paragraph (3), the Financial Services Commission shall immediately notify the competent court, and the court shall proceed to a trial on the fine for negligence pursuant to the Non-Contentious Case Litigation Procedure Act.

(5) If neither an objection is raised nor a fine for negligence paid within such period as prescribed in paragraph (3), the said fine for negligence shall be collected by referring to the dispositions on default of national taxes.

ADDENDUM

This Act shall enter into force one year after the date of its promulgation. ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation. Articles 2 through 5 Omitted.