Taiwan Amends Money Laundering Control Act to Combat Terrorism | July 2007
By Cecilia Liu and C.Y. Huang, Tsar & Tsai Law Firm, Taipei, Taiwan

Money laundering has become a major problem in Taiwan and is seriously affecting the financial stability of the country. In recent, notorious scandals such as ReBar Group Loans and the Taoyuan International Airport build-operate-transfer (BOT) MRT project, the criminals allegedly laundered money to transfer their illegal gains abroad and avoid the government’s investigation.

Since 9/11, experts are warning that terrorism has become globalized and better organized and the measures terrorists are taking have become more complicated and well-planned, making it more difficult for officials to track them down and prosecute them. As international commerce plays a very important role in Taiwan’s economy, the prevention of money laundering is a major priority for the government. To combat anti-terrorist activities more successfully and efficiently, it has become vital for Taiwan to join a global task force.

In response to the request of the Egmant Group Financial Intelligence Units and with reference to the 49 proposals by the Financial Action Task Force on Money Laundering (FATF), the Legislative Yuan of the Republic of China (ROC) on Taiwan passed an amendment to the Money Laundering Control Act (the Act) on 14 June 2007. It became effective on 11 July 2007 and the major changes can be summarized as follows.

• All the provisions set forth in other ROC codes relating to financial crimes are now listed in the Act.
• The threshold for offenses to be considered as a “serious crime” has been reduced from NTD20,000,000 to NTD5,000,000.
• The scope of “Financial Institutions” provided for by the Act has been widened to include the jewelry and foreign currency exchange sectors (when necessary). These businesses will now be regulated in the same way as financial institutions.
• The wording “or in the principles of equality and reciprocity” has been added to Articles 9, 14, 15 and 16 for the purpose of strengthening mutual assistance between Taiwan and other countries. It resolves the problem caused by Taiwan’s status in the international community by allowing for mutual assistance even without prior treaties or diplomatic relations.
• A new Article 10 imposes a notification obligation on international passengers carrying foreign cash or securities up to a certain amount.
• Individuals who provide financial aid to terrorist organizations, or who support terrorist activities, will be sentenced to imprisonment for a term of one to seven years, and can be fined up to NT 10 million.
• The prosecutor can now file an application to the court to extend the period granted for the freezing of a suspect’s property. This can now be for up to six months and balances the protection of property rights with the necessity for criminal investigation.

The amendment of the Money Laundering Control Act certainly provides better protection for Taiwan’s financial sector, and strengthens international cooperation between Taiwan and other countries with the aim of clamping down on terrorist activities. It is a major step towards integrating Taiwan into the global network of countries and agencies combating international terrorism.