Financial Crime World

Chinese Taipei’s Financial System Under Scrutiny: Organised Crime and Terrorism Financing Concerns

The recent report highlights the vulnerability of Chinese Taipei’s financial system to organised crime and terrorism financing, with significant proceeds generated from predicate offences such as drug trafficking, fraud, and smuggling. The country’s financial system is identified as a key area of concern due to its high use of cash and large informal economy, which increases the risk of illicit funds being channeled into the formal economy.

Concerns and Recommendations

  • Chinese Taipei’s financial system is vulnerable to organised crime and terrorism financing, with significant proceeds generated from predicate offences.
  • The country’s financial system is identified as a key area of concern due to its high use of cash and large informal economy.
  • Strengthening anti-money laundering (AML) and counter-terrorism financing (CFT) measures is crucial to protect the financial system.

Progress Made

  • Chinese Taipei has made significant progress in recent years, including:
    • Improvements in understanding ML/TF risks
    • Pursuing domestic cooperation and coordination
    • Developing financial intelligence
  • The Financial Intelligence Unit (FIU), located within the Ministry of Justice Investigation Bureau (MJIB), has been praised for its well-developed analytical capability and excellent IT resources.

Challenges and Limitations

  • The FIU faces challenges due to a lack of human resources, which impacts its ability to produce high-quality financial intelligence.
  • Chinese Taipei had not prioritized the pursuit of money laundering cases until 2017, resulting in low conviction rates and very low sentences applied.

Asset Recovery and Confiscation

  • Chinese Taipei has demonstrated its ability to recover assets across a range of crime areas, with confiscations totaling approximately USD 457 million since 2014.
  • The country’s authorities have also recovered considerable funds using their powers.

Recommendations for Improvement

  • Address the underreporting of suspicious transaction reports (STRs) by higher-risk sectors
  • Enhance risk-based outreach to all sectors
  • More proactive targeting of high-risk ports of entry to prevent cash couriers from bringing in large sums of money

Terrorism Financing Risks and Investigations

  • Chinese Taipei’s TF risks are low overall, but despite this, TF investigations are given a high priority.
  • The country’s authorities have well-developed investigation capacity and standard operating procedures to respond to possible cases of terrorism or TF.

Conclusion

While Chinese Taipei has made significant progress in recent years, there is still much work to be done to address the threats posed by organised crime and terrorism financing. The country must continue to strengthen its AML/CFT measures and ensure effective implementation of preventive measures to protect its financial system from these risks.