Taiwan is not a popular place for either international drug dealers and gun runners to launder their ill-gotten proceeds or terrorists to seek financing. Taiwan’s AML issues are more related to tax evasion since wealthy people in Taiwan usually move their funds offshore in an attempt to avoid taxes (TheNewsLens). AML/CFT management in Taiwanese banking industry has been passive and reluctant, focusing more of a form instead of substance level (TheNewsLens;
張迺佳 2016) since it brings in tons of compliance costs at the same time it is an obstacle to a bank’s business expansion given the over-banking problem in Taiwan. The violation incident of Mega Bank New York Branch has raised the awareness of both public and private sectors in association with AML/CFT. Moreover, Taiwan will undergo the third run of the APG mutual evaluations in the fourth quarter of 2018. If Taiwan is deemed as seriously deficient or non-compliant in AML/CFT infrastructure by international organizations, it will not only deteriorate the national reputation but also undermine the international trade since the cross-border fund transfers will be restricted and/or even rejected (張迺佳 2016).
Given that there are not enough AML/CFT professionals in the banking industry in Taiwan since few people treated it as a critical issue in the past, Taiwanese banking industry is supposed to hire external consultants with familiarity with local and international laws and regulatory requirements both in Taiwan and overseas to develop and oversee the bank’s compliance function. Furthermore, banks should hire well experienced compliance specialists from foreign-owned banks or those who were fined by the NYDFS previously since they must have made a lot of effort with a great progress in their compliance program in order to learn from their past
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experience and further cultivate the bank’s own AML/CFT employees by continuous training.
Above all, banks should establish an effective AML/CFT program with an appropriate global policy tailored to their ML/TF risks, size, nature and complexity of their business and operations both in Taiwan and overseas and set up an independent department to handle the AML/CFT issues of the bank with adequate and sufficient resources and employees. It is not possible for a bank with insufficient resources and employees to well implement the AML/CFT regime, which is also a common problem occurs in Taiwanese banking industry due to the cost saving since compliance will bring in no revenue but costs.
AML/CFT issues in Taiwan have been neglected for far too long to comply with the international standards. Therefore, the first step to combat ML/TF is to establish a culture of AML/CFT and educate the public by raising public awareness of AML/CFT and teaching them how to comply and cooperate with the government and financial institutions in the fight against ML/TF. Owning to the over-banking problem, Taiwanese banking industry is so competitive that banks tend to provide the most convenient services to their customers to maintain and attract more customers to keep profitable, and that is also one reason why Taiwanese banking industry is reluctant to well implement and comply with the AML/CFT regime since it is costly and harmful to their business expansion. A lesson learned from the US$180 million penalty, non-compliance with international AML/CFT standards is much more expensive given that it can be seen from Table 8, NYDFS fined international banking institutions at massive penalties every year in the past five years. Therefore, not having an effective AML/CFT program will expose the banks to the risk of being fined at huge penalties and further do harm to the bank’s brand image as well as the nation’s international reputation.
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Bank Name Headquarters Year Fine
Deutsche Bank AG and Deutsche Bank
AG New York Branch Germany 2017 US$425 Million
Intesa Sanpaolo S.p.A. and Intesa
Sanpaolo S.p.A. New York Branch Italy 2016 US$235 Million Agricultural Bank of China Limited and
Agricultural Bank of China, New York Branch
China 2016 US$215 Million
Mega International Commercial Bank Co., Ltd. and Mega International Commercial Bank Co., Ltd. New York Branch
Taiwan 2016 US$180 Million
Commerzbank AG and Commerzbank
AG New York Branch Germany 2015 US$610 Million
Bank Leumi Le-Israel, B.M. and Bank
Leumi USA Israel 2014 US$130 Million
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
And The Bank of Tokyo-Mitsubishi UFJ, Ltd. New York Branch
Japan 2014 US$315 Million
Standard Chartered Bank and Standard
Chartered Bank New York Branch UK 2014 US$300 Million
BNP Paribas S.A. and BNP Paribas S.A.
New York Branch France 2014 US$2,243.40
Million Credit Suisse AG and Credit Suisse AG
New York Representative Office Switzerland 2014 US$715 Million The Bank of Tokyo-Mitsubishi UFJ, Ltd.
And The Bank of Tokyo-Mitsubishi UFJ, Ltd. New York Branch
Japan 2013 US$250 Million
Source: New York State Department of Financial Services (NYDFS)
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Furthermore, with the emphasis of governments worldwide, not only the banks having overseas branches in the United States but also those with overseas branches in other foreign countries will face the challenge of being fined at huge penalties for not having an effective AML/CFT program since it involves international cooperation to win the fight against AML/CFT.
Table 9: Number of Overseas Branches of Domestic Banks, as of the end of Sept., 2017
Source: Source: Financial Supervisory Commission, Banking Bureau
Total Branches Representative
Offices Others
478 144 42 292
Subtotal 402 109 41 252
Mainland China 76 29 3 44
Bahrain 1 － 1 －
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