Minister of Justice Chen Ding-nan
Controls on money laundering are likely to curtail major crimes by hampering criminals from washing clean their illicit gains, thus curtailing the incentives to commit a crime. Anti-laundering efforts also help in the tracking down other crimes or preventing them altogether.
However, Taiwan's new government will need a comprehensive strategy and a legal framework to fight illicit funds.
Taiwan enacted the "Money Laundering Control Act" (洗錢防治法) in October 1996 to prevent the laundering of, use of and concealment of illegal monies. The Act provides for harsh punishments and stipulates that over 10,000 branches of 16 types of financial organizations must submit financial reports to the Money Laundering Prevention Center (洗錢防治中心) -- created in March 1997 -- once they discover a suspicious flow of money.
The center analizes the reports and charts the flow of money within and between financial institutions. Once any suspicious or illegal money flows are located, the center passes the information on to relevant authorities for further investigation.
However, since the center is not an independent agency and only acts in cooperation with other government units, it is unable to fully carry out its mission. It is limited by both budgetary and manpower constraints, and by the need to get cooperation from various ministries.
At present, the center is only allowed to investigate money flows within banks upon authorization of the Bureau of Monetary Affairs (BMA, 金融局) or the Central Bank of China (CBC, 中央銀行). Although the center theoretically has the right to investigate all financial institutions, this right is rarely exercised without admini-strative control from above.
If a financial organization refuses to cooperate with the center, the center cannot force the issue. It must ask the CBC or the BMA to either order the bank or financial organization to turn over the requested information or to suggest penalties. If the authorities refuse to help, however, there is nothing the center can do.
This division of investigatory and supervisory rights has greatly affected the center's effectiveness. The compartmentalization between governmental agencies also means that the center's officials are excluded from discussions within the Ministry of Finance or the CBC about drawing up policies to combat money laundering. This is a waste of enforcement resources and again reduces the center's effectiveness.
The best way to improve the center's efforts would be to set up a Unified Depositor Account System
Without compromising depositors' right to privacy, a unified account could give investigators the information they need to narrow their search for money launderers and monitor their actions closely. As a result, those politicians suspected of "black gold" activities could be monitored under the "All-in-one" -- as long as they use financial institutions to transfer money.
The Money Laundering Contract Act substantially complies with international guidelines aimed at impeding money-laundering. It reflects the anti-money laundering recommendations put forth by the 1988 UN Convention Against Illicit Traffic in Narcotic Drug and Psychotropic Substance and the 40 recommendations put forth by the Financial Action Task Force on Money Laundering in 1990 and the Basle Committee on Banking Regulations and Supervisory Practices.
Taiwan is also one of the 13 founding members of the Asia/Pacific Group on Money Laundering and became a member of the Egmont Group in 1996. Besides participating into international anti-money laundering organizations, Taiwan anticipates the implementation of international anti-money laundering standards, which can increase contributions to international anti-money laundering forces.
Lawrence Lee is a research fellow at Columbia University and assistant professor of law at Ming Chuan University School of Law.
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