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RETAIL BANKING | Staff Reporter, Taiwan
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Taiwanese banks move to plug money laundering shortfalls

There were insufficient safeguards in their offshore banking units.

Taiwanese regulators are doubling down on the shortcomings of the country’s banking sector against financial crime following the results of a peer review conducted by the Asia/Pacific Group (APG) on Money Laundering, reports Focus Taiwan. 

Although the review team by APG lauded the country’s efforts to combat money laundering activities including the establishment of the Anti-Money Laundering Office, flaws in the domestic banking sector include a lack of sufficient risk assessments in their offshore banking units (OBUs).

Also read: Taiwan's offshore exposure accounted for 24% of system assets by 2017

Securities firms were also found to have flaws in their offshore securities units (OSUs) whilst insurers had gaps to fill in their offshore insurance units (OIUs).

The peer review found that these OBUs, OSUs and OIUs had a tendency not to use the updated information to reflect the latest situation to conduct Client Due Diligence (CDD).

Penalties levelled against money launderers have also not been heavy enough to discourage crime, added the report.

In response to this claim, the Financial Services Commission (FSC) via its vice chairman Huang Tien-mu has raised the maximum fine in the Banking Act from $323,465 (NT$10m) to $970,395 (NT$30m), from $485,227 (NT$15m) in the Insurance Act, and to $155,272 (NT$4.8m) from $77,636 (NT$2.4m) in the Securities and Exchange Act.

AMLO Director Chen Ming-tang also expressed optimism that Taiwan will soon reclaim a spot in the top-tier "regular follow-up" list where the country is only required to report back two years after evaluation.

The country was last included in 2007 but was demoted in 2011 to an "enhanced follow-up," requiring it to report back one year after the evaluation.

Taiwan 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.

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