S. Korea to introduce ‘preemptive account suspension’ to block Cambodian crime proceeds

South Korea’s financial authorities are considering introducing a “preemptive account suspension system” to swiftly block illegal funds linked to Cambodian crime groups, Financial Services Commission (FSC) Vice Chairman Lee Eok-won said on Sunday.

Speaking during a parliamentary audit of the National Policy Committee, Lee stated that the FSC plans to establish a mechanism that allows financial institutions to temporarily freeze accounts suspected of being tied to crimes such as fraud, gambling, and drug trafficking before the funds can be moved.

“We recognize the urgent need for a comprehensive response to protect the public from cross-border financial crimes,” Lee said, adding that the government will work with the Ministry of Foreign Affairs to expedite the designation of financial transaction restriction targets under the Anti-Money Laundering Act.

The Financial Supervisory Service (FSS) will also strengthen its oversight of overseas subsidiaries of Korean banks. FSS Governor Lee Chan-jin noted that the current legal framework provides limited authority to directly supervise such entities and pledged to pursue legislative revisions so that new monitoring measures can be swiftly implemented.

The initiative follows reports that approximately 91.2 billion won (US$66 million) belonging to Cambodia’s Prince Group remained in accounts of Cambodian subsidiaries of Korean financial firms, sparking concerns over the handling of foreign illicit funds.

Authorities are also moving to curb money laundering through cryptocurrencies. Vice Chairman Lee said the government plans to include virtual asset exchanges’ fraud detection systems (FDS) — currently operated voluntarily — within formal regulation under the second phase of legislative reforms.

“Even before the law is finalized, we will introduce supplementary safeguards to ensure prompt and effective monitoring of suspicious virtual asset transactions,” he added.