Despite recent strides in fighting money laundering tied to international crime and drug trafficking, Taiwan is still vulnerably to illicit laundering operations and remains an area of concern to US law enforcement officials, a State Depart-ment report issued Saturday says.
The report, covering developments from last year, details drug trafficking and money laundering in some 185 countries worldwide.
While Taiwan gained high marks for its efforts to reduce the trafficking of narcotics destined for the US, it remained on a list of 53 major money laundering countries that included such countries as China, France, Germany, Britain, Japan and the US itself plus Hong Kong. That makes it a "jurisdiction of primary concern" over laundering, according to the report.
"Taiwan's modern financial sector and its role as a hub for international trade make it attractive to money laundering," the report says.
One specific area of vulnerability to money laundering is Taiwan's alternative remittance systems of "underground banks" that operate in violation of the Banking Law (
"Authorities on Taiwan consider these entities unregulated financial institutions, although pending legislation would bring them under the regulatory umbrella," the report says.
"Authorities in Taiwan do not believe that charitable and non-profit organizations in Taiwan are being used as conduits for the financing of terrorism. Taiwan is, however, investigating a number of foreign-owned and operated commercial enterprises that handle remittances by guest workers to their home countries," the report said.
"The authorities in Taiwan are actively involved in countering the financing of terrorism," the report says. Although Taiwan's ability to identify, freeze and seize terrorist-related financial assets is limited, legislation to remedy this is pending, the report notes.
Inclusion in the "primary concern" list has less to do with how vigorously the government is trying to fight laundering than with the amount of laundering suspected of occurring and the lack of adequate legal safeguards, the State Department explained.
Thus, while Taiwan has sweeping anti-laundering laws and active law enforcement cooperation with Washington, substantial laundering is going on under several legal loopholes, such as the underground banks, the report indicates.
In 2001, financial institutions in Taiwan filed 791 "suspicious activity reports" with the Money Laundering Prevention Center. These reports are considered the best measure of how much laundering is taking place. Twenty-eight percent of these were referred to law enforcement officials, 22 percent were under review and 50 percent saw no action taken. From 1997 to 2001, the government prosecuted 179 individuals in 38 cases for money laundering. In addition, in 2001, the center provided information to assist 46 domestic and 20 international investigations.
This activity is related to financial crimes, corruption, narcotics and general crime, in that order, according to the Taiwan government
Last October, the report notes, the Executive Yuan approved amendments to Taiwan's basic anti-laundering law, the 1997 Money Laundering Control Act. These amendments, which were still before the Legislative Yuan when the report was written, would allow the freezing of assets related to laundering and terrorism, expand the list of financial institutions to include pawnshops, travel agents, car dealers and real estate brokers, and toughen penalties and reporting requirements.
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