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Taiwan Takes Steps to Combat Money Laundering and Terrorist Financing

Strengthening Anti-Money Laundering Regime

In a bid to strengthen its anti-money laundering (AML) regime and combat terrorist financing, Taiwan has taken several steps in recent years. According to the Ministry of Justice, the country has prosecuted 33 cases involving money laundering in 2008, with 19 related to financial crimes such as unregistered stock trading and credit card theft.

Implementing Amendments

Taiwan has implemented amendments to its Foreign Exchange Control Act and Offshore Banking Act on April 29, 2009, to comply with United Nations Security Council Resolutions (UNSCRs) 1267 and 1373 aimed at combating the financing of terrorism.

International Cooperation

In addition, Taiwan has established a mutual legal assistance agreement (MLAA) with the United States, which provides a basis for cooperation between law enforcement agencies in investigations and prosecutions of narcotics trafficking, money laundering, and other financial crimes. The country has also signed memorandums of understanding (MOUs) with several countries to establish mechanisms for cooperation in AML/CFT matters.

Membership and Evaluations

Taiwan is a member of the Asia/Pacific Group on Money Laundering (APG), a regional body that promotes cooperation among its members to combat money laundering and terrorist financing. The country’s most recent mutual evaluation by the APG can be found on its website.

Domestic Legislation

The Taiwanese government has also taken steps to strengthen its AML regime, including amendments to its Mutual Legal Assistance Law in 2007, which reduced restrictions on mutual legal assistance and allowed for cooperation based on principles of reciprocity and mutual benefits. The country has also enacted domestic legislation to implement the standards set out in key UN Conventions related to AML/CFT.

Challenges

Despite these efforts, Taiwan still faces challenges in implementing its AML regime fully. The country is not a member of the Financial Action Task Force (FATF) and does not have an offshore jurisdiction blacklist in place. However, it has made significant progress in recent years and continues to improve its AML regime to meet international standards.

Recommendations

Pass legislation to criminalize terrorism and terrorist financing as an autonomous crime.
Exert more authority over nonprofit organizations.
Strengthen the existing AML regime by implementing new measures included in the 2009 MLCA amendments.
Abolish all shell companies and prohibit new ones from being established.
Enhance implementation of legislation regarding alternate remittance systems.
Conduct investigations into underground finance and its links to trade fraud and trade-based money laundering.