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Cablegate: Amendments to Anti-Money Laundering Law

VZCZCXRO9309
RR RUEHGH
DE RUEHIN #1185/01 1500039
ZNR UUUUU ZZH
R 300039Z MAY 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 5405
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCPDOC/USDOC WASHDC
RUEHBK/AMEMBASSY BANGKOK 3705
RUEHBJ/AMEMBASSY BEIJING 6841
RUEHUL/AMEMBASSY SEOUL 8678
RUEHGP/AMEMBASSY SINGAPORE 6915
RUEHKO/AMEMBASSY TOKYO 8811
RUEHML/AMEMBASSY MANILA 0068
RUEHJA/AMEMBASSY JAKARTA 4079
RUEHKL/AMEMBASSY KUALA LUMPUR 3747
RUEHHI/AMEMBASSY HANOI 3319
RUEHBY/AMEMBASSY CANBERRA 4519
RUEHWL/AMEMBASSY WELLINGTON 1790
RUEHHK/AMCONSUL HONG KONG 8090
RUEHGH/AMCONSUL SHANGHAI 1117
RUEHGZ/AMCONSUL GUANGZHOU 0288

UNCLAS SECTION 01 OF 02 TAIPEI 001185

SIPDIS

SIPDIS

STATE PLEASE PASS USTR
STATE FOR EAP/RSP/TC, EAP/EP
USTR FOR ALTBACH and Stratford
USDOC FOR 3132/USFCS/OIO/EAP/WZARIT
TREASURY FOR OASIA/LMOGHTADER
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF
GOVERNORS, AND SAN FRANCISCO FRB/TERESA CURRAN AND NY FRB MARIA
BOLIS

E.O. 12958: N/A
TAGS: EINV EFIN ECON PINR TW
SUBJECT: Amendments to Anti-Money Laundering Law

REF: (A) TAIPEI 360, (B) TAIPEI 1163

SUMMARY
-------

1. In response to the Asia-Pacific Group on Money Laundering
(APG)'s 2007 assessment, Taiwan has drafted a bill to amend its
Money Laundering Control Act (MLCA). The bill will reclassify some
crimes as felonies and put a new agricultural bank, trust companies,
and currency exchanges under regulation of the MLCA. The bill is
designed to combat financing of terrorism (Ref B), strengthen
reporting of cross-border cash and securities transport (ref A), and
promote information sharing. END SUMMARY.

APG Assessment and Recommendation
---------------------------------

2. Early this year, the APG concluded its assessment of Taiwan's
anti-money laundering mechanisms and made 49 recommendations for
improvement. In order to comply with the recommendations and
reinforce money laundering controls, Taiwan decided to amend its
MLCA. On May 8, the Executive Yuan submitted the proposed MLCA
amendments to the Legislative Yuan (LY) for review.

Coverage of Money Laundering Expanded
-------------------------------------

3. The bill will add new crimes to the scope of the law and
reclassify some violations of the MLCA as felonies (defined as
subject to a jail term longer than five years). The crimes added
include offences against the Public Procurement Law, Banking Law,
Securities Transaction Law, Bills Finance Management Law, Insurance
Law, Financial Holding Company Law, Trust Law, Credit Cooperative
Association Law, and Agriculture Financing Law.

4. The bill will include the National Agricultural Bank (NAB),
trust companies, and currency exchanges (which include hotels,
jewelry stores, postal offices, temples, and bus/railway stations)
in its list of financial institutions regulated by the MLCA.

5. The number of agencies with money laundering responsibilities
will be expanded from just the Ministry of Justice (MOJ), Ministry
of Transportation and Communications, and Ministry of Finance (MOF)
to include the Financial Supervisory Commission (FSC, established in
July 2004), Ministry of Economic Affairs, Council of Agriculture
(supervising NAB and the credit departments of farmers' and
fishermen associations), and Taiwan's Central Bank (TCB, monitoring
currency exchanges).

Currency and Other Bearer-negotiable Instruments
--------------------------------------------- ---

6. The bill will reiterate the current requirements for both
inbound and outbound passengers to declare local and foreign
currencies as well as gold. Currencies and gold are subject to
separate limits (see ref A for the limits). Currencies exceeding
the limits without declaration will be confiscated. For gold
exceeding the limit, passengers are required to obtain prior
import/export permission in addition to the declaration. False
declarations can lead to confiscation and fines.

7. The bill will also restrict carrying bank checks, traveler
checks, and other securities across borders. A declaration is
required for amounts exceeding a limit set jointly by the MOF, MOJ,
FSC, and TCB. According to the bill, TCB will be authorized to set
penalty guidelines for violations.


TAIPEI 00001185 002 OF 002


Financing Terrorism
-------------------

8. The Ministry of Justice has shifted three articles on financing
terrorism to this MLCA bill from the proposed Anti-Terrorism Act,
which has been stalled due to concerns that expanded police powers
might impinge on civil rights. The articles prohibit funding
terrorist activities such as homicide, kidnapping, hijacking, etc.
Violators face a jail term of 1-7 years and/or a fine of up to NT$10
million (US$303,000).

Information Sharing
-------------------

9. Taiwan will share information obtained from the MLCA with
countries with which it has signed a mutual legal assistance
agreement (MLAA). The bill will also authorize Taiwan agencies to
share the information with law enforcement agencies in countries
without an MLAA arrangement on a reciprocal basis.

YOUNG

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