Taiwan to toughen anti-money laundering law after US fine

Taiwan is investigating Taipei-based Mega International Commercial Bank, linked to the so-called Panama Papers scandal, in the wake of a $180 million fine levied by US authorities AFP/Mandy Cheng

Last week, American regulators fined Taiwan's Mega International Commercial Bank US$180 million for showing "flagrant disregard" for anti-money laundering laws, saying they had identified "suspicious transactions" between the bank's New York and Panama Branches.

Some of the bank's customer accounts were formed with the help of Mossack Fonseca - the Panamanian law firm at the centre of a huge data dump in April, they said.

A trove of leaked papers revealed murky offshore financial dealings that used shell companies to help politicians, celebrities and sports stars to skirt taxes.

Taiwan's cabinet passed a bill to amend the island's anti-money laundering law in a bid to curtail money-laundering and telecom fraud, it said, which includes increasing the maximum fine for offenders.

However, the bill must receive parliament's final approval before becoming law.

"The amended law shows our country's resolve to fight economic crimes and money laundering," Premier Lin Chuan said in a statement.

Under the bill, the maximum fine for money laundering will be set at Tw$5 million ($158,200), up from Tw$1 million, officials said.

The legislation also contains a new clause targeting fraud rings, which stipulates those who acquire properties or financial gains from "unjustifiable sources" that do not fit their income levels can be investigated for money laundering.

It also removes a stipulation that only illegal gains exceeding Tw$5 million are punishable under money laundering legislation and requires lawyers, accountants and real estate agencies to screen clients and report suspicious transactions to authorities.

Mega International, which counts Taiwan's Ministry of Finance and the National Development Fund among its shareholders, agreed to fix an internal compliance system that the regulator called "a hollow shell".

Taiwan's Financial Supervisory Commission has ordered Taiwanese banks with overseas branches to tighten their anti-money laundering controls. It added that the US order did not specify whether Mega International actually engaged in money laundering.