October 2015

CLIENT ALERT | KOR | Major Anti-Bribery Legislation, the “Kim Young-ran Law”, passed by the National Assembly

by Scott Sung-Kyu Lee

Key Takeaways

  •  New Anti-Bribery legislation passed by the Korean National Assembly to come into force in September 2016.
  • Scope of corporate criminal liability enhanced to include bribes paid by employees.
  • Definition of the public official expanded to include employees of private schools, members of the media who are registered under Korean law, and “civilians who perform public functions according to relevant laws.”
  • The new legislation imposes a higher standard of anti-bribery compliance for corporations.
  • Guidance on courtesy payments expected by way of Presidential Decree.


The National Assembly of the Republic of Korea passed a landmark anti-bribery legislation, titled the “Act on the Prohibition of Improper Solicitation and Provision/Receipt of Money and Valuables,” on March 3rd, 2015. The act, commonly referred to as the “Kim Young-ran Law”, having been named after the former head of the Anti-Corruption & Civil Rights Commission who led the preparation of the original bill, was passed by the National Assembly after having undergone numerous revisions over the past few years.

The bill, which was first introduced in August 2012, gained significant traction over the course of last year in the wake of the Sewol ferry incident.  After passing the National Policy Committee on January 12th, 2015, the bill was submitted for deliberation by the Legislation and Judiciary Committee in February 2015.

After an extensive debate members of the National Assembly from both the majority and opposition parties finally arrived at a consensus on key definitions.  Therefore, the resulting legislation is largely similar to the version that passed the National Policy Committee earlier in the year, with the exception of the following: (i) the law applies to payments and benefits provided to the spouse of a public official but not to other “family members” (as defined in the Civil Code); (ii) the law will come into force 18 months after public announcement, as compared to 12 months as was deliberated earlier; and (iii) administrative fines, where applicable, will be imposed by the courts rather than by the Anti-Corruption & Civil Rights Commission.

Noteworthy features

As a whole, the new legislation contains several features which represent significant departures from the existing anti-bribery regime in Korea.

Corporate criminal liability for a payment or benefit provided to a public official by employees: While the anti-bribery provisions under the Criminal Code do not impose liability on corporations for bribes paid by employees, under the new legislation corporate criminal liability may be imposed for the payment of bribes by an employee unless the corporation exercised due care and supervision to prevent such misconduct.

Criminal liability for payment or benefits provided to a public official exceeding KRW 1 Million in a single instance or exceeding an aggregate KRW 3 million per year regardless of whether such payments or benefits were linked to the recipient’s official duties: Contrary to the anti-bribery provisions in the Criminal Code which require the crime of official bribery to establish that a payment or benefit was provided/received “in connection with the receiving official’s duties”, under the new law criminal liability would be imposed without having to establish such a link to the public official’s duties as long as the value of benefits received by the public official exceeds KRW 1 million (approximately USD 1,000) in a single instance or the aggregate value of benefits in a one-year period exceeds KRW 3 million (approximately USD 3,000).

If the value of a payment or benefit provided to and received by a public official is below KRW 1 million in one instance and the sum of benefits given to the same public official in a one-year period is less than KRW 3 million, and there is a link to the public official’s duties, the courts will in all likeliness rather impose administrative fines than criminal sanctions.

Criminal liability for a public official who knew of but failed to report a payment or benefit provided to his/her spouse in connection with official duties: Another significant provision in the new legislation is that criminal sanctions shall be imposed on public officials if a payment or benefit is provided to the public official’s spouse in connection with the public official’s duties and the public official intentionally omits to report the incident to the authorities.

Expanded scope of application: While the public bribery prohibition under the Criminal Code is limited to bribing public officials and those who are considered public officials within the meaning of the Criminal Code (e.g. employees of state-owned enterprises and state-invested corporations), the new legislation applies not only to public officials but also to employees of private schools, members of the media who are registered under Korean law, and “civilians who perform public functions according to relevant laws.”

Prohibition against improper solicitation with respect to public officials: The new law also prohibits “improper solicitation” (i.e. causing public officials to violate laws or to abuse their position or authority) irrespective of whether such solicitation involves any payment or provision of benefits.  The act which illustrates fifteen types of behaviour which examplifies improper solicitation expressly excludes another seven types of requests made to public officials from the scope of improper solicitation, including: (i) open requests to commit a certain act, (ii) requests made to elected officials, political parties or civil groups for public interest purposes, (iii) requests to protect rights that were/are being infringed by legal procedures and also (iv) other requests that remain within the bounds of social custom.

The road ahead

The Kim Young-ran Act has brought about significant change to the legal paradigm in matters governing public official misconduct.  Compared to other developed countries, the Korean anti-corruption regime, until now, was not known to impose particularly strict standards and adherence to “global anti-corruption standards” went a long way to avoid running afoul of Korean anti-corruption laws. However, this new legislation imposes much stricter requirements on interactions with public officials and from now on corporations will have to implement procedures and policies to ensure compliance.

It is expected that further clarification on the issue of “courtesy payments” is likely to come in the form of a Presidential Decree prior to the legislation taking effect and that they may continue to be legitimate in light of social custom.

While the new law will not take effect until September 2016, it is advisable that corporations undertake a detailed review of their existing corporate compliance policies and anti-corruption compliance framework to ensure conformity with future standards. In particular, it is imperative that corporate policies in regard to the reimbursement of payments made at weddings and funerals are reviewed.


Scott Sung-Kyu Lee
Individual member
Email: sklee@kimchang.com

c/o Kim & Chang
233 Naeja-dong, Jongno-gu
Seoul 110-720
Email: sklee@kimchang.com