Premier Lin Chuan (林全) has instructed an office be set up to strengthen money laundering prevention and control in Taiwan, Cabinet spokesman Hsu Kuo-yung (徐國勇) said yesterday.
Minister without Portfolio Lin Mei-chu (林美珠) has been assigned to head the office and bring in judicial personnel, auditing and financial supervision officials to discuss money-laundering prevention issues, Hsu said.
Part of the motivation for the move is an evaluation of Taiwan’s money-laundering prevention practices by the Asia/Pacific Group on Money Laundering, scheduled to take place in 2018.
Despite being a founding member of the group, Taiwan has been placed on the group’s watchlist since an evaluation in 2007.
Minister of Justice Chiu Tai-san (邱太三) said Taiwan’s demotion to the group’s regular follow-up list along with Vietnam, Indonesia and the Philippines in 2007 and further demotion to the reinforced follow-up list in 2011 was evidence of Taiwan’s weak money-laundering prevention system.
If the nation again fails to pass the group’s evaluation, “our financial institutions’ overseas operations will be affected and restricted,” Chiu said when asked about the new office, which he said would handle the group’s evaluation.
There are concerns that if Taiwan does poorly in the new evaluation and is listed as a high-risk area for money laundering, foreign banks would be less willing to work with their Taiwanese counterparts and foreign companies would be less willing to invest in Taiwan.
A first step toward improving money-laundering prevention practices was taken on Dec. 9 last year last year when the legislature passed revisions to the Money Laundering Control Act (洗錢防制法). The act is to take effect in June.
Under the act, in addition to financial institutions, jewelry store operators, land registration agents, real-estate brokers, practicing lawyers and accountants are required to report any suspicious financial transactions by their clients to the authorities.
Capital flows of “high-risk” politicians and their family members and close aides are also covered by the reinforced controls mandated in the amended law, Chiu said.
Another revision provides for fines ranging from NT$500,000 to NT$5 million (US$15,499 and US$154,991) for financial institutions that avoid, refuse or interfere with regular money-laundering checks.
Last year, Mega International Commercial Bank’s New York branch was fined US$180 million, by the New York State Department of Financial Services for violating anti-money laundering compliance practices.
Chiu yesterday admitted that the high-profile case exposed flaws in Taiwanese financial institutions.
“Financial institutions will be requested to attend personnel training programs on money laundering prevention,” he said.
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