FATF AML Deficiency List
Offshore Finance Center
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
Weakness in Government Legislation to combat Money Laundering
Taiwan is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Taiwan was undertaken in 2019. According to that Evaluation, Taiwan was deemed Compliant for 10 and Largely Compliant for 26 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 7 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.
US Department of State Money Laundering assessment (INCSR)
Taiwan was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR) but has not been included since. Key Findings from the last report are as follows: -
Taiwan’s modern financial sector, strategic location within the Asia-Pacific international shipping lanes, expertise in high-technology production, and role as an international trade hub make it vulnerable to transnational crimes, including money laundering, drug trafficking, telecom fraud, and trade fraud. Domestic money laundering is generally related to tax evasion, drug trafficking, public corruption, and a range of economic crimes.
Official channels exist to remit funds, which greatly reduce the demand for unofficial remittance systems; however, although illegal in Taiwan, a large volume of informal financial activity takes place through unregulated, and possibly organized crime-linked, non-bank channels. Taiwan has five free trade zones and a growing offshore banking sector, which are regulated by Taiwan’s Central Bank and the Financial Supervisory Commission. There is no significant black market for smuggled goods in Taiwan.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 65
World Governance Indicator – Control of Corruption 83
Corruption does not represent a major obstacle for business operating or planning to invest in Taiwan. However, there are several reports of official corruption. These can be traced back to the close ties between politics and business which have raised the risks of corruption particularly in public procurement. Petty corruption, however, is very uncommon in most sectors. Taiwanese anti-corruption law is primarily contained in the Anti-Corruption Act, the Criminal Code and the Organic Statute for Anti-Corruption Administration and the government generally implemented these laws effectively. Taiwan's Agency Against Corruption defines low-level gratuities; therefore, any facilitation payment could be viewed as a bribe by the courts. For further information - GAN Integrity Business Anti-Corruption Portal
Taiwan has a dynamic capitalist economy with gradually decreasing government guidance on investment and foreign trade. Exports, led by electronics, machinery, and petrochemicals have provided the primary impetus for economic development. This heavy dependence on exports exposes the economy to fluctuations in world demand. Taiwan's diplomatic isolation, low birth rate, and rapidly aging population are other major long-term challenges.
Free trade agreements have proliferated in East Asia over the past several years. Following the landmark Economic Cooperation Framework Agreement (ECFA) signed with China in June 2010, Taiwan in July 2013 signed a free trade deal with New Zealand - Taipei’s first-ever with a country with which it does not maintain diplomatic relations - and, in November, inked a trade pact with Singapore. However, follow-on components of the ECFA, including a signed agreement on trade in services and negotiations on trade in goods and dispute resolution, have stalled. In early 2014, the government bowed to public demand and proposed a new law governing the oversight of cross-Strait agreements, before any additional deals with China are implemented; the legislature has yet to vote on such legislation, leaving the future of ECFA up in the air as of the conclusion of President MA's second and final term in May 2016. MA portrayed ECFA as Taiwan’s key to greater participation in East Asia’s free trade networks, and has also expressed interest in Taiwan joining the Trans-Pacific Partnership.
Taiwan's total fertility rate of just over one child per woman is among the lowest in the world, raising the prospect of future labour shortages, falling domestic demand, and declining tax revenues. Taiwan's population is aging quickly, with the number of people over 65 expected to account for nearly 20% of the island's total population by 2025.
The island runs a trade surplus, largely because of its surplus with China, and its foreign reserves are the world's fifth largest, behind those of China, Japan, Saudi Arabia, and Switzerland. In 2006 China overtook the US to become Taiwan's second-largest source of imports after Japan. China is also the island's number one destination for foreign direct investment. Taiwan since 2009 has gradually loosened rules governing Chinese investment on the island and has also secured greater market access for its investors in the mainland. In August 2012, the Taiwan Central Bank signed a memorandum of understanding (MOU) on cross-Strait currency settlement with its Chinese counterpart. The MOU allows for the direct settlement of Chinese Renminbi (RMB) and the New Taiwan Dollar across the Strait, which has helped Taiwan develop into a local RMB hub.
Closer economic links with the mainland bring opportunities for Taiwan’s economy but also pose challenges as political differences remain unresolved and China’s economic growth is slowing. Domestic economic issues loomed large in public debate ahead of the 16 January 2016 presidential and legislative elections, including concerns about stagnant wages, high housing prices, youth unemployment, job security, and financial security in retirement.
Agriculture - products:
rice, vegetables, fruit, tea, flowers; pigs, poultry; fish
electronics, communications and information technology products, petroleum refining, chemicals, textiles, iron and steel, machinery, cement, food processing, vehicles, consumer products, pharmaceuticals
Exports - commodities:
semiconductors, petrochemicals, automobile/auto parts, ships, wireless communication equipment, flat display displays, steel, electronics, plastics, computers
Exports - partners:
China 27.1%, Hong Kong 13.2%, US 10.3%, Japan 6.4%, Singapore 4.4% (2012 est.)
Imports - commodities:
oil/petroleum, semiconductors, natural gas, coal, steel, computers, wireless communication equipment, automobiles, fine chemicals, textiles
Imports - partners:
Japan 17.6%, China 16.1%, US 9.5% (2012 est.)
Investment Climate - US State Department
Strategically located between Northeast and Southeast Asia, Taiwan is an important hub for regional and global trade and investment, especially in the high-technology industry. Indicative of its developed and open investment environment, Taiwan ranks in the upper 15th percentile of major global indices measuring ease of doing business, economic freedom, and competitiveness. To promote Taiwan’s regional economic integration and as part of seeking participation in multilateral free trade arrangements, regulatory agencies have initiated reforms across many sectors of the economy, including enhancements to protection of intellectual property rights and other investment-related regulations.
As a relatively open and liberal economy, Taiwan benefits from substantial foreign direct investment, with a total cumulative stock of USD 137 billion in approved investment as of December 2015. Taiwan’s GDP growth slowed to 0.65 percent in 2015, largely as a result of declining exports due to slow regional and global economic growth. Taiwan attracts a wide range of U.S. investors, including in high-tech, traditional manufacturing, and services. The United States is Taiwan’s largest single source of foreign investment, with the stock of committed U.S. foreign direct investment reaching USD 17.1 billion in 2014. U.S. private commercial services exports to Taiwan totaled over USD 12.8 billion in 2014.
Structural impediments in Taiwan’s investment environment include stalled progress on the privatization of Taiwan’s state-owned enterprises (SOEs), which exert influence in the utilities, aerospace, energy, postal, transportation, financial, and real estate sectors. Foreign ownership limits remain in place for wireless and fixed-line telecommunications, television broadcast, and transportation. Restrictions on investments from mainland China in some sectors have been relaxed as cross-Strait ties have improved. The Taiwan Central Bank retains a currency convertibility policy in which it reserves the right to require large transactions that could impact the foreign exchange market to be scheduled over several days. Foreign private equity firms have noted a lack of transparency and predictability in the investment approvals process.
Aiming to promote Taiwan as a regional financial hub, Taiwan’s Financial Supervisory Commission (FSC) adopted a series of liberalization measures in 2014, including liberalization of financial firms’ overseas investments and expansion of overseas business units. Amendments passed by the Legislative Yuan in June 2015 to investment-related statutes clarified review criteria for mergers and acquisitions. Other regulatory revisions and amendments to existing statutes proposed in 2015 aim to clarify review criteria for foreign investment in Taiwan, but these were not implemented or passed by the legislature.
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