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16 January, 2018
Taiwan became the first country in Asia to enact specific anti-money laundering laws (AML) in 1996. To further evidence its commitment to AML, they became a founding member of the Asia-Pacific Group on Money Laundering (“APG”). However, despite their prior initiatives, it was placed on the APG’ s regular watch list in 2007 and remained on it until recently, following the enactment of its enhanced amended regulations to the Money Laundering Control Act (the “AML Act”). We had a chance to speak with the lawyers at Tsar & Tsai Law Firm regarding the amended AML Act, and here is what they had to say.
Conventus Law: What are some of the key amendments and how will they help rebuild the country’s reputation with AML?
Tsar & Tsai Law Firm: The key amendments include:
1. Risk-based approach is adopted.
Risk-based approach is the core concept of Financial Action Task Force’s (“FATF”) 40 recommendations. Risk-based approach is now adopted in Taiwan. Thus, financial institutions and designated non-financial businesses or professions shall apply a risk-based approach to undertake client due diligence measures to verify the identity of the client and its beneficial owner, and keep all information obtained through the client due diligence measures.
2. Designated Non-Financial Businesses or Professions (“DNFBPs “) are subject to the Taiwan AML regime.
According to the lasted amendments of Money Laundering Control Act (“the AML Act”), DNFBPs are subject to the Taiwan AML regime. Before the amendments of AML Act, DNFBPs in Taiwan don’t see themselves as having a gatekeeping role to prevent Money Laundering, but now DNFBPs is subject to the Taiwan AML regime.
The DNFBPs includes the following businesses and professions:
(1) Jewelry retail businesses.
(2) Land administration agents and real estate agencies, when they are involved in transactions concerning the buying and selling of real estate.
(3) Lawyers, notaries public and accountants, when they prepare for or carry out transactions for their clients concerning the specified activities.
(4) Trust and company service providers, when they prepare for or carry out transactions for clients concerning the specified activities.
(5) Other businesses or professions, with the characteristics of their operation or transaction modes likely involved in money laundering.
3. Enhanced customer due diligence measures for Politically Exposed Persons (“PEPs”)
PEPs is regarded as high-risk in money laundering. According to the amendments of AML Act , financial institutions and DNFBPs shall apply a risk-based approach to conduct enhanced client due diligence measures for a client or its beneficial owner who is a politically exposed person currently or previously entrusted with a prominent public function by the domestic or a foreign government or an international organization, as well as his or her family members and close associates.
CL: Are there other steps, in addition to the enhanced regulations in the Act, that Taiwan’s government is considering taking to help combat AML?
T&TLF: According to FATF 40 recommendations, countries should identify, assess, and understand the money laundering and terrorist financing risks for the country, and should take action, including designating an authority or mechanism to coordinate actions to assess risks, and apply resources, aimed at ensuring the risks are mitigated effectively.
To comply with the recommendation above, Executive Yuan sets up Anti-Money Laundering Office to coordinate the enforcement of the AML Act. The Anti-Money Laundering Office has held national money laundering risk assessment conference to identify, assess, and understand the money laundering and terrorist financing risks for Taiwan. The national money laundering risk assessment report will completed by early 2018.
CL: Do you foresee any significant challenges that businesses will encounter as they implement measures aimed at compliance with the amended regulations?
T&TLF: Pursuant to the AML Act, the client due diligence measures shall be taken by financial institutions and DNFBPs when establishing business relations with their clients. Clients are required to provide the information of their beneficial owners. According to the AML Act, “beneficial owner” means a natural person who ultimately owns or controls a client. The challenge is to confirm the beneficial owner of a client, especially when the client’s shareholders and holding structure are complex.
For further information, please contact:
Matt Liu, Partner, Tsar & Tsai Law Firm
MattLiu@TsarTsai.com.tw
