According to recent foreign newspaper reports, the FBI has discovered that Osama bin Laden -- the mastermind of the Sept. 11 terrorist attacks in the US -- might have used Taiwan as part of his money laundering network before transferring funds to Afghanistan and Pakistan. The news highlights the fact that money laundering has become an issue that must be faced. The misuse of financial organizations as criminal tools is a financial and security problem that is not confined to a single nation. Rather, it is an international problem.
Money laundering involves extortionists, drug dealers and other criminals transferring their illegal profits several times through the financial system before ultimately transferring them back to their accounts to "wash clean" their illicit proceeds and prevent law enforcement agencies from following the money to trail them. They are then able legally to use the money generated by criminal activity to expand their criminal organizations in an invisible manner and jeopardize global order and security.
In response to mounting concerns over such criminal acts, the Financial Action Task Force (FATF) on money laundering, established by the G-7 in 1989, put forward the 40 Recommendations in 1990. The FATF is an inter-governmental body monitoring the implementation of the Forty Recommendations at a national and international level. The FATF anticipates that all countries can criminalize money laundering and furthermore, set up a global anti-money laundering mechanism to curb international money laundering.
As regards the recommendations of the FATF, Taiwan enacted the Money Laundering Control Act (洗錢防制法) on Oct. 23, 1996. It took effect six months later. A Money Laundering Prevention Center (洗錢防制中心) was founded under the Ministry of Justice Investigation Bureau (調查局) to deal with reports of suspected money-laundering transactions submitted by financial institutions and to launch anti-money laundering work. In the four years since its establishment, the center, as a unit under the investigation bureau, developed Taiwan's money laundering prevention work from scratch, expanded it to the scale at which it currently operates. Each staff member at the center deserves our encouragement.
But the initiative is limited in the fight against money launderers due to the fact that the center cannot independently dispatch official documents or draw up its budgets. In addition, since the center has no authority over financial institutions, it cannot directly take administrative disciplinary action against those who do not cooperate with anti-money laundering work. Instead, it has to submit proposals to the Bureau of Monetary Affairs (
Even worse, the abuse of "dummy accounts" (人頭帳戶) in Taiwan has made it more difficult to investigate money laundering. The public often fails to understand that giving out their personal information allows others to open banking accounts under their name or undertake any number of unlawful activities. Acting with only their immediate interests in mind, they have no idea that they have become scapegoats for or accomplices to criminal rings until they are declared bankrupt or the police pay them a visit. But, by then, it's too late.
The Money Laundering Control Act requires financial institutions to preserve records of currency transactions of more than NT$1.5 million. The US system, however, requires that transactions of US$10,000 or above, as well as suspicious transactions, should be sent to the Financial Crimes Enforcement Network for analysis. When it comes to submitting reports on suspected money-laundering transactions, Taiwan's financial institutions usually do only a perfunctory job by simply keeping records, and are unwilling to dig any deeper.
The laws and regulations should therefore be amended to require that the financial institutions report currency transactions of a certain value, as well as suspicious transactions to the center, instead of merely keeping records. This would be helpful to investigations into money laundering. It would also improve the effectiveness of anti-money laundering work, elevating the status of the Money Laundering Prevention Center and ending the abuse of dummy accounts. Only in this way can Taiwan make international money launderers recognize Taiwan as a forbidden zone.
Lawrence Lee is an assistant professor of law at Ming Chuan University School of Law.
Translated by Jackie Lin
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