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The 10 th ASOSAI Research Project April 24, 2013 Na Young Kim Researcher of Research Institute

Part II. Evaluation of Current Situation of Corruption and Money-laundering Questionnaire Survey results of Korea. The 10 th ASOSAI Research Project April 24, 2013 Na Young Kim Researcher of Research Institute Board of Audit and Inspection of Korea. Overview.

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The 10 th ASOSAI Research Project April 24, 2013 Na Young Kim Researcher of Research Institute

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  1. Part II. Evaluation of Current Situation of Corruption and Money-launderingQuestionnaire Survey results of Korea The 10th ASOSAI Research Project April 24, 2013 Na Young Kim Researcher of Research Institute Board of Audit and Inspection of Korea

  2. Overview ◆ Views of Previous Survey Results - Corruption perception Index (TI) ◆ Questionnaire Survey Results(ASOSAI) - Corruption & Money Laundering ◆ Conclusion & Limitation ◆ Q & A session

  3. Sources ◆ Questionnaire Survey Results • Corruption - Ministry of Justice (X3) - Board of Audit and Inspection (X1) • Money laundering - Financial Intelligence Unit (X1) ◆ Previous Survey Results • CPI: Corruption Perception Index - Transparency International (www.transparency.org)

  4. Views of Previous Survey Results ◆ Current Situation of Korea from IO • TI’s CPI of Korea on 2012 - korea has scored 56 out of 100 - but ranked 27th out of 34 OECD nations - declining two years in a row • Limitation of CPI: - perceptions toward public based on private sector

  5. Survey results on corruption (1) • 1. prevalence • Moderate (x2) • moderate and widespread among public sectors (x2) • 2. compare with previous years • about the same (x3) • slightly higher than previously • 3. Transparency International's-Corruption Perception Index fairly reflect • Yes(x2) • No (x2) • 4. the Global Integrity Index fairly reflect • Yes (x2) • No (x2)

  6. Survey results on corruption (2) • 5. tolerance level of population • Moderately intolerant towards corruption • 6. strength of steps • Moderate (x2) • Strong • Weak • 7. dealing pattern • moderately predictable (x2) • unpredictable but benefitting few top leaders • 8. most frequent occurrence • equally in private and public (x2) • in private entities • in public entities

  7. Survey results on corruption (3) • 9. prevalent types of corruption • corruption at enterprise level (x3) • petty corruption • 10. prevalence of petty corruption • Moderate (x3) • high • 11. involved personnel • high-level management (x2) • rank and file employees • public • 12. main patterns of petty corruption • varies and hard to tell • the specific field • teachers, builders

  8. Survey results on corruption (4) • 13. prevalence of grand corruption • moderate (x2) • low (x2) • 14. involved personnel in grand corruption • elected officials and their personal favorites (x3) • specific business interests and/or political groups • 15. most common types • Kickback (x2) • Bribery (x2) * usually between $50K~$100K

  9. Survey results on corruption (5) • 16. most vulnerable to corruption • judiciary • legislature • law enforcement/police • taxation • 17. greatest occurrence probability • electoral irregularities (x2) • licensing • revenue collection • 18. monies and assets gained used • investing in real estate (x2) • leisure, social activities (x2)

  10. Survey results on corruption (6) • 19. root cause • culture and cumbersome administrative procedures (x2) • complicated and cumbersome administrative procedures • culture, customs and habits of giving bribes • 20. "main cause is derived from the patronage-client system" • Agree • 21. "weak accounting practice are conditions favorable" • Agree

  11. Survey results on corruption (7) • 22. prioritize monitoring the situation • medium priority (x3) • essential • 23. prioritize complaints • medium priority (x3) • essential • 24. role of whistle blower • very important (x2) • moderately important (x2) • 25. whistle blowing effective • Effective (x3) • very effective

  12. Survey results on corruption (8) • 26. government's budget damage • Serious (x3) • somewhat serious • 27. private sector damage • Serious (x3) • somewhat serious • 28. citizen damage • Serious (x3) • somewhat serious • 29. corruption during budget formulation is primarily grand or political corruption • Agree

  13. Survey results on corruption (9) • 30. unchecked and excessive executive discretion create opportunities for political corruption • Agree • 31. public financial management system weakness increase the risk • Agree • 32. significant incidences past 5 years • N/A (x3) • Bribery (x1) • 33. more to add • N/A • 34. any other remarks • N/A

  14. Survey results on Money laundering (1) • 1. seriousness • Not serious • 2. tends to increase • partially agree • 3. more sophisticated • Agree • 4. main pattern • mostly in private sectors

  15. Survey results on Money laundering (2) • 5. the highest risk • 1. finance, banking • 2. trade • 3. construction • 4. international trade, foreign investment • 6. common method • 1. cash transaction • 2. business • 3. stock market • 4. through financial institutions • 5. casino • 6. Project • 7. Through internet • 8. disguised loan • 9. Real estate • 10. Money exchange

  16. Survey results on Money laundering (3) • 7. favorable environments • international economic integrating • 8. associated offences • embezzlement • 9. main reason for criminals • evading taxes • 10. consequences • compromised economy and private sector • 11. economic and social consequences • Serious

  17. Survey results on Money laundering (4) • 12. negative impact on national security, international reputation, weaken the economy and economic reforms • Serious • 13. significant incidences from 2007 to 2010 - N/A • 14. usual styles in our country • tax evasion and stock price manipulation • 15. general assessment • Economic crimes such as tax evasion and embezzlement pose serious threat • Korea’s AML/CFT mechanism plays important role in deterring overall corruption

  18. Conclusion & Limitation • Previous surveys did not reflect perceived ideas from insiders based on realities: actual data, so it couldn’t provide implication of policy correctly. And we tried to survey insiders of public sector; only competent agencies. • - involved personnel in grand corruption : elected officials and their personal favorites - most vulnerable to corruption : Judiciary, legislature, law enforcement/police, taxation - useful institute: Whistle blowing act and AML/CFT • This result has its benefits, but has its limitations because this is purely based on perceptions of insiders, therefore more respondents would have ensured more accurate result. Further surveys based on actual data should follow-up.

  19. Conclusion & Limitation • One of the most persistent problems for the past generation’s anti-corruption reform movement has been a lack of detailed measurements and feedback. • Corruption is largely a clandestine activity without immediate victims who might file reports; as a consequence, it is impossible to measure corruption directly with any validity, reliability, and precision.

  20. Q & A • Thank you very much! • Questions and Comments

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