Busy preparations are underway for the third round of appraisals of the Asia-Pacific Group on Money Laundering (APG) at the end of this year for Taiwan. The results will not only affect the convenience of future capital transfers to and from overseas investors, but also Taiwan’s decline in international status and reputation.
In particular, although Taiwan was one of APG’s founding members, during the second APG appraisal in 2011, it was unexpectedly listed with countries like Bhutan, Pakistan, Papua New Guinea, and Afghanistan in the transitional follow-up procedures. It was only after the New York branch of Mega International Commercial Bank suffered heavy penalties that domestic financial institutions become aware that international legal compliance was so important. Thus, in the past two years, following efforts by all parties, not only had Taiwan been removed from money-laundering watchlist last year, but also carried out preparations with the hopes of receiving a satisfactory report card in the third evaluation, in order to show the maturity of its money laundering prevention in its finance industry and related industries and services.
Aside from the Legislative Yuan’s quick completion of legislative amendments, this preparatory work also includes interagency meetings between the Office of Money Laundering Prevention and Control of the Executive Yuan, the Legal Affairs Department, and the Financial Supervisory Commission (FSC), etc. These bodies have been mobilized in the shortest time to strengthen awareness and preparation of finance and related industries (such as real estate, pawning, etc.) by means of work including promotion, a national risk report, and even practice tests. In terms of financial institutions, both public and private, we can also clearly feel the impact of spontaneous input, including the establishment of a dedicated agencies for legal compliance, staff education and training, and incentives to obtain AML control licenses, etc., accompanying the government’s efforts in pursuit of the best results possible.
Therefore, this issue of the Taiwan Banker specially presents the front-line observations and expectations of the main leaders in different ministries, sharing experiences gained from participation of Taiwanese delegations in the assessments of other countries, and producing recommendations for practice assessment questions and preparation attitude, which can provide help for financial institutions in their final sprint.
For example, after the Bankers Association of the ROC held Overseas Division Managers, Legal Compliance Officers, and Internal Audit/Control seminars in New York, Hong Kong, last year, they were once again held in held in New York in March of this year. A total of over one hundred chairmen and general managers attended, following high-level head office personnel responsible for legal compliance, internal audit, or overseas business in eight state banks, presenting to overseas audiences the determination of Taiwan’s banking sector to improve legal compliance. They not only drew the attention of the U.S. side – who had sent a high-level representative to the meeting – but who also replied recently to Hua Nan Bank and signed a Letter of Agreement with the Federal Reserve in April stating that “Hua Nan Commercial Bank has taken measures to reduce its confidentiality /AML risks, and continues to improve its supervision and other compliance plans related to the operations of its New York branch.” This result shows that hard work is not wasted.
Vice Chairman Huang Tien-Mu (黃天牧) of the FSC compared this APG assessment preparation to the 2000 WTO negotiations, a national mobilization between ministries and the public and private sectors. The difference however is that “back then it was to join an international organization, whereas now it is to prevent marginalization due to poor AML performance.” In fact, Taiwan’s gradual marginalization is not only due to AML. Because of pressure coming from across the Strait and from the international situation, in the coming years Taiwan will require further mobilization activities like inter-ministerial meetings and public-private interchange for many public policies and trade affairs, such as joining the CPTPP, compliance with Paris Agreement, and promotion of the Equator Principles. All of these efforts require arduous work. If this APG assessment can be successfully passed at the end of this year, this rather rare and valuable experience will serve as a lesson for Taiwan’s various future challenges, in order for it to integrate itself with the world and prevent marginalization - a cornerstone of mobilization plans to lead itself into the international system and sustain its development impetus.