Third-round APG mutual evaluation

  • Date: 2018-12-03

The outcome of Taiwan’s third round of mutual evaluation by members of the Asia/Pacific Group on Money Laundering (APG) will have far-reaching effects on the overall activities of Taiwan’s financial sector. To ensure the nation passes the review, the government implemented a raft of measures including establishing the Anti-Money Laundering Office (AMLO) under the Executive Yuan, tightening regulations against money laundering and terrorist financing, intensifying financial supervision, and cracking down on illegal money flows. The private sector, meanwhile, strengthened internal controls, regulatory compliance measures and other management mechanisms.

A team from the APG conducted the evaluation onsite in Taiwan in November 2018, and in its initial findings commended the country for making significant progress over the past two years. The APG will release a preliminary evaluation report in January 2019 followed by an official report at an annual APG meeting that July.

APG initial key findings and recommendations

Strengths: The establishment of the AMLO demonstrates leadership from high levels of government and excellent coordination capabilities. Taiwan also provides quality and timely assistance for international cooperation requests relating to money laundering and recovery of illegal assets. Taiwan’s financial intelligence unit is effective in its role, and has created comprehensive mechanisms against money laundering and terrorist financing.

Weaknesses: Taiwan’s risk assessment methodology contains some gaps in terms of cross-border movement of cash, foreign exchange, and certain environmental crimes. Regular customer due diligence routines rely heavily on basic documentation, and identification of controlling interests for offshore companies is inadequate. The conviction rate for money laundering offenses is relatively low and the penalties do not provide sufficient deterrence.

Specific recommendations: Taiwan should continue to finalize and implement a national strategy combating money laundering and terrorist financing. The coordination mechanism that was put in place for the third-round evaluation should be institutionalized. Taiwan should also strengthen international cooperation, particularly against drugs and smuggling.