Financial Crime World

Chinese Taipei’s Struggle Against Money Laundering and Terrorist Financing: A Mixed Bag

The Asia-Pacific Group on Money Laundering (APG) has released a mixed evaluation of Chinese Taipei’s efforts to combat money laundering (ML) and terrorist financing (TF). While the country has made significant progress in some areas, it still faces challenges in others.

Organised Crime and Predicate Offences

Chinese Taipei is plagued by an array of predicate offences, including:

  • Drug trafficking
  • Fraud
  • Smuggling
  • Corruption
  • Bribery

These crimes generate significant proceeds, which are often laundered through various methods such as:

  • Wire transfers
  • Cash couriers
  • Shell companies

AML/CFT System

The country has implemented an Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) system, with areas of effectiveness including:

  • The Financial Intelligence Unit (FIU) produces good-quality financial intelligence
  • Law enforcement agencies have well-developed capabilities to utilize FIU-disseminated intelligence in financial investigations

Investigations and Prosecutions

However, Chinese Taipei has struggled to prioritize the pursuit of ML cases until recent reforms. This has resulted in:

  • Low conviction rates
  • Sentences that are not commensurate with the threats posed by ML
  • Underreporting of suspicious transactions, hindering the ability to effectively combat ML

Confiscation and Asset Recovery

On a positive note, Chinese Taipei has demonstrated its ability to recover assets across various crime areas, confiscating approximately:

  • USD 457 million since 2014

Tax authorities have also recovered considerable funds using their powers.

TF Risks and Investigations

While TF risks are low overall, Chinese Taipei’s authorities have given a high priority to investigating and prosecuting TF cases. A number of cases have been proactively investigated alongside possible terrorism cases.

Challenges Ahead

Despite these efforts, Chinese Taipei still faces challenges in addressing ML and TF, including:

  • Strengthening its AML/CFT framework
  • Improving the prioritization of ML cases
  • Enhancing its capacity to recover assets
  • Addressing underreporting of suspicious transactions
  • Improving the targeting of high-risk sectors

In conclusion, while Chinese Taipei has made progress in combating ML and TF, it still faces significant challenges that must be addressed to effectively protect its financial system from criminal activities.