Stung by reputation, Taiwan looks to turn corner on money laundering

Mega Financial Holding Co

30/08/2017 08:37

* Taiwan known as money-laundering "paradise", minister says 
    * Island now looking to change that with new laws 
    * Adopting international standards to combat money 
laundering 
    * Taiwan removed from APG money laundering watchlist 
 
    By Faith Hung 
    TAIPEI, Aug 30 (Reuters) - After Taiwan's state-run Mega 
Financial Holding Co  2886.TW  was fined $180 million by U.S. 
authorities for lax enforcement of anti-money-laundering rules 
at its New York branch, the bank started a rigorous training 
programme for its staff. 
    Now, like Mega Financial, companies across Taiwan are 
working to get staff and systems up to speed after the island 
passed laws to meet international standards on combatting money 
laundering and was taken off a watchlist by the Asia Pacific 
Group on Money Laundering (APG). 
    "Unfortunately, Taiwan has earned a name for itself as a 
paradise for money laundering," Deputy Justice Minister Tsai 
Pi-chung told Reuters. 
    Money laundering and cybercrime connections to Taiwan, which 
is also in the process of pushing through a cyber security bill, 
have grabbed global headlines. 
    U.S. authorities fined Mega Financial $180 million last year 
for lax enforcement of anti-money-laundering rules at its New 
York branch. 
    Some money from the $170 million cyber heist of India's 
Union Bank of India  UNBK.NS  was transferred through Taiwan's 
Bank SinoPac. An international crime ring used malware to steal 
$2.6 million from the ATMs of Taiwan's First Bank. 
    Taiwan was one of the six most targeted countries of the 
Wannacry ransomware attack earlier this year, according to 
security company Avast.  
    Since 2011, 800 people from China and Taiwan have been 
deported from Cambodia on suspicion of telecoms fraud. 
    Following its U.S. fine, Mega Financial said cleaning up its 
act is a top priority. 
    U.S. authorities had said the Mega branch had been 
"indifferent" to the risks associated with transactions 
involving Panama, a high-risk area for money laundering. 
    "What happened at our New York branch was just terrible," 
said Robert Tsai, a senior executive vice president, referring 
to the fine and ensuing scandal. 
    "Half of our 6,000 clerks have been certified with 
anti-money laundering training. How each of our branches 
implements the rules and ensures proper training is the top 
priority for our business." 
    To gain international confidence in its anti-money 
laundering measures, Taiwan will have to demonstrate it is 
putting the laws into practice. The APG will review Taiwan in 
2018. 
    "The visit will focus on how effectively Taiwan will have 
actually implemented the anti-money laundering rules," said 
Liang Hung-lieh, partner of PricewaterhouseCoopers Taiwan. 
    "The APG's on-site review will be new to most of the 
assessed, including banks, non-bank financial institutions and 
in particular non-financial institutions such as lawyers, public 
certified accountants and other professional service providers." 
    Under the anti-money laundering laws, these financial 
professionals will be required to report suspicious 
transactions, including bank transfers exceeding T$500,000 
(US$16,500). 
    They will have to determine where the money came from, 
provide details about the client and report that to Taiwan's 
newly established Anti-Money Laundering Office. 
    These are similar to regulations that countries that have 
signed up to global anti-money laundering rules overseen by the 
Financial Action Task Force (FATF) have adopted. 
    The cost to companies of implementing the new rules may be 
significant as they put processes, workers and data systems in 
place. 
    "There's a lot of extra work for them to do now, such as 
determining the identities of their clients' beneficiaries," 
said an official with the Financial Supervisory Commission, the 
island's financial regulator. He declined to be identified in 
the absence of permission to speak to the media. 
    "They don't yet know exactly what they have to do, and to 
what extent, to be considered compliant with the new 
regulations. They're going to need some time to digest all of 
these new rules," he said. 
    The potential costs and increased difficulty of getting 
transactions done under the new rules worry those in the 
property market, said Wong Jui-chi, the spokesman for Taiwan's 
Chinese Association of Real Estate brokers, while emphasising 
that his industry intends to fully comply with the regulations. 
    "The property market is already in a bad shape and these new 
rules will make things worse by making the process of real 
estate transactions more complicated. More or less everyone in 
our industry is complaining about it," he said. 
 
 (Reporting by Faith Hung; Additionanl reporting by Ben 
Blanchard in BEIJING; Editing by Neil Fullick) 
 ((faith.hung@thomsonreuters.com; 8862 2500 4893; Reuters 
Messaging: faith.hung.thomsonreuters.com@reuters.net)) 
 
Keywords: TAIWAN MONEYLAUNDERING/