How Taiwan has become a global leader in Anti-Money Laundering compliance

In 2016, Taipei-based Mega International Commercial Bank Co was fined a record $180 Million USD by authorities in New York, for having a “Hollow Shell” in their compliance program. As a result of this record-breaking fine, shockwaves were sent throughout Taiwan to official circles, at the same time legislators were considering new regulations to combat financial crimes. Although the fine imposed on Mega Bank was considered to be excessive, Yu Li-Chen, executive secretary of the government’s anti-money laundering office said: “it really was a blessing in disguise”.

Fear of a similar scandal has pushed lawmakers to pass a stronger framework which was implemented in June of 2017. This has allowed for financial institutions across Taipei, to reassess their Anti-Money Laundering procedures, ensuring that they are now able to pass the revised law as it stands. This framework is currently being evaluated by the Asia Pacific Group (APG) on Money Laundering. A favourable assessment by APG will guarantee Taiwan’s Status as one of the best jurisdictions for anti-money laundering rules, alongside Macau and Indonesia. Last year’s previous round of reviews, raised Taiwan’s ranking from one of the worst AML compliant countries to one of the most compliant countries in the world.

During the course of the two-week appraisal, APG’s evaluators interviewed 16 representatives, chosen from among Taiwan’s financial institutions such as lawyers, accountants, real estate agents, financial regulators and the coast guard. Results are expected to be released soon. Being listed as a non-compliant country can negatively affect the economic growth of the country due to the sanctions that are levied against it. Taiwan’s Government has responded to this by tightening regulations over the past two years, in order to prevent sanctions being imposed on their own country.

The Mega Bank fine provided a wake-up call to all financial companies and officials who had fallen into a “box-checking culture”. Evidence of this can be seen in the decrease in the number of AML cases from 2017 – 2018. In 2017 there were 277 Cases equating to $1 million USD worth of fines this then dropped to 254 cases in 2018 worth $162,000 USD.
Heightened Know-Your-Customer laws, has meant that firms need to cut ties with long-standing clients who were unwilling or unable to comply with the new rules and regulations. Stricter procedures have also affected banking customers as it now takes two forms of identification and a specified purpose to open a personal Bank account. The FSC (Financial Supervisory Commission) is in the process of mandating checks on all transactions over $16,000 USD.

Politicians have also been caught up with the new regulatory changes, they now have to deal with more paperwork when conducting business with their own banking. PWC Taiwan helped institutions prepare for the evaluation, however, they have predicted that it could take two to three years to build up the necessary data to establish usable customer risk profiles. Miaojung Lin & Samson Ellis from Bloomberg said that these new AML processes have “forced Taiwanese Companies to get to grip with these new rules faster and in more detail than some other” countries. It is my hope that no other company will need to receive a fine in the hundreds of millions of dollars, to spark the reassessment of a countries AML rules and regulations.

Do you think your company is doing enough to comply with AML rules, if not, maybe it is time to speak up…?