Financial Crime World

Global Financial Watchdog Sounds Warning on Chinese Taipei’s Money Laundering and Terrorism Financing Risks

A recent report by the Asia-Pacific Group on Money Laundering (APG) has highlighted concerns over China Taiwan’s (Chinese Taipei’s) vulnerabilities to money laundering (ML) and terrorism financing (TF). The island nation, a key player in global trade and finance, is vulnerable to organized crime and corruption, with a significant informal economy contributing to the risk of illicit proceeds entering the formal economy.

Vulnerabilities and Risks

  • Chinese Taipei’s predicate offenses, including drug trafficking, fraud, and smuggling, generate significant profits for criminal organizations.
  • Corruption and bribery are also notable areas of concern, with specific types of fraud, such as tax and securities-related crimes, being used to conceal beneficial ownership.

Progress Made

  • Chinese Taipei has made some progress in strengthening its anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.
  • The country’s Financial Intelligence Unit (FIU), the Anti-Money Laundering Department (AMLD), has developed an excellent analytical capability and IT resources, producing good-quality financial intelligence.

Concerns and Recommendations

  • Underreporting of suspicious transactions reports by higher-risk sectors is a concern.
  • Lack of human resources at the AMLD is also a concern.
  • The pursuit of ML cases has been limited in the past, with low conviction rates and sentences applied.
  • Chinese Taipei’s authorities need to prioritize the pursuit of ML cases, improve their asset-tracing capacity, and enhance their cooperation with international partners.
  • Implementing a risk-based approach to targeting cash couriers is recommended.
  • Strengthening border controls is also necessary.

Conclusion

While Chinese Taipei has made some progress in strengthening its AML/CFT framework, more needs to be done to address the significant risks posed by ML and TF. The report serves as a warning to both domestic and international stakeholders, emphasizing the importance of cooperation and information sharing to combat these threats effectively.