Taiwan to beef up money laundering prevention before APG evaluation

Premier Lin Chuan (??) has instructed that an anti-money laundering office under the Cabinet be opened to strengthen money laundering prevention and control in Taiwan, Cabinet spokesman Hsu Kuo-yung (???) said Wednesday.

Minister without Portfolio Lin Mei-chu (???) has been assigned to head the office and bring in judicial, personnel, auditing and financial supervision officials to discuss money-laundering prevention issues, Hsu said.

Part of the motivation for the move is the looming evaluation of Taiwan's anti-money laundering practices by the Asia/Pacific Group on Money Laundering (APG) in 2018.

Despite being a founding member of the APG, Taiwan has failed to keep up with the times in preventing and controlling international financial crimes such as money laundering, and has been placed on the group's watchlist since an evaluation in 2007.

Justice Minister Chiu Tai-san (???) said Taiwan's demotion to the APG's regular follow-up list along with Vietnam, Indonesia and the Philippines in 2007 and further demotion to the reinforced follow-up list in 2011 was evidence of Taiwan's weak anti-money laundering system.

If Taiwan again fails to pass the APG's evaluation in 2018, "our financial institutions' overseas operations will be affected and restricted," Chiu warned when asked about the new office, which he said will handle the APG evaluation.

There are concerns that if Taiwan does poorly in the new evaluation and is listed as a high-risk area for money laundering, foreign banks will be less willing to work with their Taiwanese counterparts and foreign companies will be less willing to invest in Taiwan.

A first step toward improving anti-money laundering practices in Taiwan was taken late last year when the Legislature passed revisions to Taiwan's Money Laundering Control Act on Dec. 9, 2016 that will take effect beginning in June.

Under the revised act, in addition to financial institutions, jewelry store operators, land registration agents, real estate brokers, practicing lawyers and accountants are all required to report to authorities any suspicious financial transactions by their clients.

Capital flows of "high-risk" politicians and their family members and close aides are also covered by the reinforced controls mandated in the amended law, Chiu said.

Another revision provides for fines ranging from NT$500,000 to NT$5 million for financial institutions that avoid, refuse or interfere with regular money-laundering checks.

The underlying event that has prompted the government to take money laundering prevention came in August 2016, when the New York branch of Mega Bank was fined US$180 million because of its poor anti-money laundering compliance practices.

The New York State Department of Financial Services, which imposed the fine, said the bank failed to maintain an effective and compliant anti-money laundering program and described the compliance failures as "serious."

Chiu Tai-san admitted Wednesday that the high-profile Mega Bank exposed flaws in the internal controls and systems adopted by Taiwanese financial institutions to prevent money laundering.

"In the future, financial institutions will be requested to attend personnel training programs on money laundering prevention," he said.

Source: Focus Taiwan News Channel