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Taiwan's financial regulator to offer solutions to flaws

2018/11/17 15:07:32

Taipei, Nov. 17 (CNA) Taiwan's Financial Supervisory Commission (FSC), its top financial regulator, is determined to come up with solutions in early December to correct shortcomings found in a peer review conducted by the Asia/Pacific Group on Money Laundering (APG).

Huang Tien-mu (黃天牧), FSC vice chairman, said the commission will hold internal meetings with its Banking Bureau, Securities and Futures Bureau, Insurance Bureau and Financial Examination Division soon to discuss how to respond to the APG findings and correct the flaws.

A team organized by the APG held the third round of a peer review in Taiwan, involving 13 banks, two securities firms and two life insurance companies, from Nov. 5 to 16.

The APG uses a "mutual evaluation," or peer review, program to assess how well members are complying with standards on fighting international money laundering and combating the financing of terrorism (AML/CFT).

Taiwan is a member of the organization.

While the APG's review team praised Taiwan in its preliminary results for the country's efforts in fighting money laundering, the review also pointed out some shortcomings.

According to the preliminary results released Friday, the flaws cited by the peer review included a lack of sufficient risk assessments by Taiwanese banks' offshore banking units (OBUs), local securities firms' offshore securities units (OSUs) and Taiwanese insurers' offshore insurance units (OIUs).

The peer review found these OBUs, OSUs and OIUs tended not to use the upated information to reflect the latest situation to conduct Client Due Diligence (CDD), which had compromised Taiwan's efforts to combat money laundering.

In addition, the peer review also pointed out that penalties for violations in the local financial sector have not been heavy enough to deter money laundering.

Huang said late Friday that since 2018, the FSC has significantly raised the maximum fine in the Banking Act to NT$50 million (US$1.62 million) from NT$10 million, to NT$30 million from NT$15 million in the Insurance Act, and to NT$4.8 million from NT$2.4 million in the Securities and Exchange Act.

The peer review paid close attention to usual practices in Taiwan such as the use of dummy accounts or nominee accounts which dominant roles stand behind, and which could lead to more complex transactions and hide money flows to make it difficult to detect money laundering.

Huang said the upcoming meetings inside the FSC are expected to come up with solutions to the concerns raised by the APG's peer review in a bid to better present Taiwan's anti-money laundering efforts.

The Executive Yuan has cited David Shannon, the head of the peer review team in Taiwan, as saying it was impressed with Taiwan's anti-money laundering efforts in the past two years and praised the newly established Anti-Money Laundering Office (AMLO) for its coordination in the arena.

The office has been preparing for the third round APG peer review since it was established on March 16, 2017.

Shannon was also cited as saying that Taiwan has allocated sufficient resources to fight money laundering in non-financial sectors, which has led to progress in promoting efforts to combat money laundering and terrorism financing over the past two years.

The APG will submit an evaluation report in January 2019, and the evaluation team will visit Taiwan again in March to conduct a four-day follow-up on-site review before releasing a final report at an annual meeting of the APG in July.

AMLO Director Chen Ming-tang (陳明堂) said he was optimistic that Taiwan will be included in the top-tier "regular follow-up" list.

Taiwan was placed in the "regular follow-up" list by the APG in 2007, which required it to report back two years after the evaluation.

But the country was demoted in 2011 to an "enhanced follow-up," requiring it to report back one year after the evaluation.

It was then placed on the "transitional follow-up list" in 2014 after making some improvements and was removed from that list on July 20, 2017.

The APG currently has 41 members, and its Secretariat is located in Sydney, Australia. Taiwan is one of the founding members of the APG, one of only a few international organizations in which Taiwan has a seat.

(By Tien Yu-pin and Frances Huang)