FATF Status

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.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           67

World Governance Indicator – Control of Corruption             N/A

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 remains a critically important market for regional and global trade and investment. Taiwan is one of the world’s top 20 economies in terms of gross domestic product (GDP) and serves as the United States’ ninth largest trading partner according to 2022 statistics. An export-dependent economy of 23.5 million people with a highly skilled workforce, Taiwan is at the center of global and regional high-technology supply chains due to its robust manufacturing industries of semiconductors, 5G telecommunications, AI, and the Internet of Things (IoT).

Taiwan President Tsai Ing-wen’s administration seeks to promote economic growth by increasing domestic investment and FDI. Taiwan authorities offer investment incentives and aim to leverage Taiwan’s strengths in advanced technology, manufacturing, and R&D to attract foreign investors. Taiwan’s finance, electronics, and wholesale and retail sectors remain top targets of inward FDI. Post COVID-19 pandemic, Taiwan has also witnessed growth in foreign firms’ greenfield investments, including from companies trying to reduce their over-reliance on People’s Republic of China (PRC) supply chains. In 2022, Taiwan authorities have also tightened their FDI screening process to prevent circumvention by PRC firms.

Taiwan attracts a wide range of U.S. investors, including in advanced technology, traditional manufacturing, and services sectors. The United States is Taiwan’s second-largest single source of FDI after the Netherlands, through which some U.S. firms also choose to invest. In 2021, according to the U.S. Department of Commerce data, the total stock of U.S. FDI in Taiwan reached US $16.8 billion. U.S. services exports to Taiwan totaled US $10 billion in 2021.

Structural impediments in Taiwan’s investment environment include the following: excessive or inconsistent regulation; market influence exerted by domestic and state-owned enterprises (SOEs) in the utilities, energy, postal, transportation, financial, and real estate sectors; and foreign ownership limits in sectors deemed sensitive. Taiwan has among the lowest levels of private equity investment in Asia, although private equity firms are increasingly pursuing opportunities in the Taiwan market. Foreign private equity firms have expressed concern over the lack of transparency and predictability in the investment approvals, as well as exit processes and regulators’ reliance on administrative discretion when rejecting certain transactions.

Major industry and business groups have called on Taiwan authorities to re-examine Taiwan’s energy generation mix and high local content requirements. These conditions limit foreign firms’ participation. amidst rising concerns about a stable energy supply as Taiwan seeks to phase out nuclear power by 2025. The local content requirements for critical components of offshore wind projects (which can be as high as 60 percent) have complicated foreign firms’ competition with domestic suppliers and driven up overall costs for foreign offshore wind developers, putting Taiwan’s future energy security needs at risk. In 2022, Taiwan authorities also raised electricity rates by 15 percent for industrial users for the first time in four years to keep state-owned Taipower Company afloat amid skyrocketing international fuel prices and operational costs. The hike has affected 22,000 heavy energy users, especially in the manufacturing sector, with foreign and domestic firms raising energy stability concerns. To secure Taiwan’s domestic food supply, Taiwan authorities also provide subsidies to farmers to support transitioning rice planting to soybeans.

Country Links

Anti-Money Laundering Division (AMLD )​

Central Bank of the Republic of China