Taiwan battles money laundering

> Measures include training staff, beefing up financial systems after being taken off Asia-Pacific group watchlist

TAIPEI: After Taiwan’s state-run Mega Financial Holding Co was fined US$180 million (RM767.6 million) by US 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 Pichung 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.

US authorities fined Mega Financial US$180 million last year for lax enforcement of anti-money-laundering rules at its New York branch.

Some money from the US$170 million cyber heist of India’s Union Bank of India was transferred through Taiwan’s Bank SinoPac. An international crime ring used malware to steal US$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 US fine, Mega Financial said cleaning up its act is a top priority.

US authorities had said the Mega branch had been “indifferent” to the risks associated with transactions involving Panama, a highrisk 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 antimoney 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, nonbank financial institutions and in particular non-financial institutions such as lawyers, public certified accountants and other professional service providers.”