Taiwan Cracks Down on Money Laundering with New Anti-Financial Crime Law

The Taiwanese government has enacted a new law aimed at preventing money laundering activities and combating related crimes, which took effect on January 1, 2023. Let’s explore the key provisions of this groundbreaking legislation.

Defining Money Laundering

The Act defines money laundering as:

1. Concealing the origin of proceeds from specified unlawful activities
2. Disguising their true nature, or
3. Accepting and using the proceeds of such activities.

Specified unlawful activities span from criminal offenses carrying a minimum six-month prison sentence to acts listed in various laws like the Criminal Code, Smuggling Penalty Act, Bankruptcy Law, and Trademark Act.

Targeting Financial Sectors

The Act targets both financial institutions and designated nonfinancial businesses or professions in its fight against money laundering:

Financial Institutions

Financial institutions, including banks, credit unions, insurance companies, securities firms, and more, must establish anti-money laundering systems and conduct customer due diligence. They are required to keep records of transactions for at least five years and report suspicious transactions to the Investigation Bureau of the Ministry of Justice.

Designated Nonfinancial Businesses or Professions

These entities cover jewelry shops, real estate agencies, lawyers, accountants, and trust companies. They also need to establish anti-money laundering systems and conduct customer due diligence.

International Collaboration

To address international money laundering risks, the Act enables Taiwanese authorities to collaborate with overseas counterparts. Authorities can request targeted measures against high-risk countries and regions, including:

1. Strengthened customer verification procedures
2. Transaction limitations

Penalties

The Act mandates imprisonment and fines for individuals found guilty of money laundering offenses. Penalties range from six months to five years for individuals possessing disproportionate assets with unaccounted sources and up to seven years for those involved in money laundering activities.

Impact

The new Act is expected to bolster Taiwan’s reputation as a financial hub and decrease its vulnerability to financial crimes. However, criticisms argue for stricter measures for enforcing penalties and greater international cooperation. Nonetheless, Taiwan’s latest anti-money laundering legislation marks a significant step forward in the island’s fight against financial crimes.