Data Governance in AML:Addressing Data Quality & Usability

SUMMARY

FATF Report on Professional Money Laundering

KEY TAKEAWAYS

Taking AML maturity in Bangladesh to the next level

COUNTRY SPOTLIGHT

Taiwan’s AML/CFT Regime

March 2019Fintelekt

AML Quarterly Newsletter

Welcome to the fourth edition of the AMLQuarterly Newsletter, Fintelekt’spublication designed to bring to you thelatest trends, regulatory updates, newsand views related to anti-moneylaundering and countering of terroristfinancing (AML/CFT).

This edition features articles on DataGovernance in AML, Taking AML Maturityin Bangladesh to the Next Level, and aSummary of FATF’s report on ProfessionalMoney Laundering.

Fintelekt announces its first AsiaAML/CFT Summit, which will take placeon September 11-12 in Hanoi, Vietnam(more information in this edition). TheSpeaker line-up for this Summit is excitingand promising. Do take a look at theagenda and take advantage of the SuperEarly Bird Delegate Fees. We hope to seeyou in Hanoi at this Summit!

Meanwhile, you are welcome tocontribute articles, whitepapers, or apoint of view related to AML/CFT/FCC.

EditorArpita BedekarDirector – Marketing, Fintelekt Advisory Services arpita@fintelekt.com

EDITOR’S NOTE

CONTENTS

COVER STORY 3

Data Governance in AML

SUMMARY 6

FATF Report on Professional Money Laundering Report

KEY TAKEAWAYS 9

Taking AML Maturity in Bangladesh to the Next Level

ANNOUCEMENTS 12

FCAP Hall of Fame

IN CONVERSATION WITH 13

Kazi Shafiul Azam, Sr. Asst. Vice President,

Prime Bank, Bangladesh

SPOTLIGHT 15

Taiwan’s AML/CFT Regime

NEWS 17

Asia Regulatory Updates

Data Governance in AML

One of the key ingredients in the success of

the new technology

developments is that of the

availability of quality data in

its most usable form.

Banks and financial institutions play a critical role incollecting and storing customers’ data. From thecompliance perspective, however, disparate datasources and the lack of standardisation in the availabledata is making AML compliance more and moredifficult. Large amounts of resources are being investedinto building sophisticated systems that aim to makeAML monitoring more effective and efficient.

Technologies like big data and analytics, artificialintelligence and machine learning are being deployed tosolve specific business problems such as that of falsepositives, providing a unified view of customers, readilyavailable data and ongoing due diligence. However, oneof the key ingredients in the success of the newtechnology developments is that of the availability ofquality data in its most usable form.

A strong data system helps financial institutions toarrive at better risk categorization of customers, trackmovement of money seamlessly, monitor complextransactions, have a global overview of customers andthereby improve overall compliance.

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Good quality data can also prove to

be of tremendous value to

regulators, through timely

and meaningful reporting, as well

as the ability to make more

informed decisions.

Regulatory supervision can

effectively move to an insight-based model, vis-à-vis a

risk-based model.

If data is secure, consistent, standard and isavailable on a single platform, institutions may findit easier to identify money laundering patterns asthe movement of money through the organisation isuniversally visible.

Good quality data can also prove to be oftremendous value to regulators, through timely andmeaningful reporting, as well as the ability to makemore informed decisions. Regulatory supervisioncan effectively move to an insight-based model, vis-à-vis a risk-based model.

Data availability and usability challenges

AML compliance officers often encounter severalchallenges while dealing with data:

Data silos

Data is available within various differentdepartments such as credit cards, or forex or privatebanking, as well as from external data sources suchas credit bureaus or media sources. Bringing thisdata from disparate data sources on to a singleplatform so as to provide a complete identity of thecustomer has been a challenge that many bankshave been grappling with.

Lack of standardisation

Even when disparate data sources are broughttogether, there is no standardisation in the way datais obtained, stored or made available from each ofthese sources. Integration of diversified databases isamong the biggest challenges faced by banks.

Lack of authenticity of data

The authenticity of data, especially those gatheredfrom external data sources is often difficult to verify.The amount of data absorbed from such sources –such as google, or published media sources -depends on the risk appetite of each individualfinancial institution.

Quality differences in new and legacy customers’data

Data quality has been improved with the help ofnew technologies, especially with the advent ofdigital on-boarding. However, the quality of legacydata continues to be inferior and integrating it withnewer data poses a challenge.

COVER STORY

4

Addressing Data Quality Issues

The biometric system Aadhar introduced by the Indiangovernment was paving the way for a unified system ofidentification serving as a national identity documentfor Indian banks, doing away with the need for multipledocuments. However, the recent Supreme Courtjudgment striking down some provisions on the use ofAadhar is a huge set-back for Indian banks and financialinstitutions. It is expected that the regulators will soonbring some changes to existing laws and provide moreclarity in terms of expectations from banks and financialinstitutions on the use of Aadhar.

Banks and financial institutions have been tryingvarious innovative solutions to address datamanagement and quality issues. Creating datawarehouses or data lakes by integrating data obtainedfrom various sources is one such area. Existing AMLsystems can then be connected to the warehouse,which will help sharing of data in a structured manner.The need of the hour is to be able to combine physicaldata with digital data effectively. A collaborativeapproach to data management involving credible thirdparties such as technology service providers, creditbureaus, telecom companies and the likes can also beused to bolster the quality of existing data. Anysuccessful partnerships will result in significant benefitsfor all parties, including underserved consumers.

Going Forward

A significant regulatory change that may be expected inthe near future is a Data Protection Law by the Indiangovernment. The Sri Krishna Committee, headed byJustice BN Sri Krishna has submitted itsrecommendations to the government, includingprovisions such as categorization of data into personal,sensitive and critical categories, mandatory consent forprocessing of data and the customer’s right to beforgotten. If passed, the bill may change the way banksand financial institutions treat data going forward, andtrigger off another requirement for data managementsolutions and innovative approaches to the storage andusage of data. What also remains to be seen is theimpact of these provisions on the existing PMLAguidelines, which will be critical for AML monitoring.

In the long run, what will drive an effective AMLcompliance programme is access to the complete andaccurate identity of a customer in a single place. It isimperative for financial institutions to understand theimportance of good data governance, and worktowards establishing systems that will support inachieving this goal.

COVER STORY

In the long run, what will drive an

effective AML compliance

programme is access to the

complete and accurate identity of

a customer in a single place.

5

Professional Money

Laundering – FATF

Report

The Financial Action Task Force

published a report on Professional

Money Laundering in July 2018. The following article

provides a summary of the key takeaways from the

report.

Professional Money Launderers (PMLs)specialize in avoiding safeguards laiddown by governments to prevent moneylaundering and terrorism financing. Theyuse their knowledge and expertise toexploit legal loopholes and help criminalsconvert illegitimate funds into legitimateflows, in exchange for a fee. A PML isconcerned with the destination of themoney and the process by which it ismoved. It is important to note that thePML may not possess any criminalbackground which makes it difficult tocatch them in the investigation web.

PMLs include Organised crime groups(OCGs) as well as Complicit actors,involving lawyers, accountants, bankers,brokers, tax advisors, dealers in preciousmetals, cryptocurrency exchange dealersand others.

Services performed by a PML mayinclude fake documentation, creating andregistering shell companies, cominglinglegal and illegal proceeds, moving illicitcash, purchasing properties and assetson behalf of the client, recruiting andmanaging money mules and others.

SUMMARY

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Fees or commissions paid to the PMLdepend upon factors like:1. Complexity of the task involved.2. Quantum of funds involved and duration

of time within which the funds have tobe legitimized or laundered.

3. Denomination of the banknotes (for cashembezzlement).

4. Reputation of the PML.5. Extent of involvement of PML

(sometimes the criminal group may useits own inhouse resources to launder thefunds and only some activities in thelaundering chain may be undertaken bythe PML).

PMLs maintain a shadow accounting systemwherein every transaction undertaken bythem is recorded with all its relevant details,using code names for the client. This couldbe stored in virtual forms using passwords,or on paper and proves as a valuable sourceof information for investigators.

Categories of PMLs:

• Individual PML - They possessspecialized skills and may offer MLservices while being part of a legitimateprofession – such as accountants, legaladvisors, financial advisors or specialistsin company formation.

• Professional Money LaunderingOrganisation (PMLO): - A group of twoor more who come together to providemoney laundering advice services. Eachmember is specialized in his subject.Money laundering may be one arm of thisgroup’s otherwise legitimate business.

• Professional Money LaunderingNetwork (PMLN): - It is a network ofindividual PML/s and/or one or morePMLOs. This network is quite extensive,informal, diversified, highly skilled andcaters to multiple OCGs or criminalaffiliates including terrorist organizations.

Role and Function of PML:

1. Providing full leadership and controlover ML activities including deciding feesand commissions.

SUMMARY

2. Bringing clients to the PMLs,establishing contact and relationshipwith PMLs in other jurisdictions,accessing the network of existingPMLOs, etc.

3. Maintaining infrastructure or tools thatenable setting up of shell companies,open fake bank accounts and creditcards. For this, a PML may have tomaintain a network or connection withthe Registrar who can register dummycompanies. They also need to recruitmoney mule herders or cash hoardersand such other resources.

4. Generation and management offraudulent documents like duplicateidentification papers, fake companyformation papers, bank statements,invoices, customs documents, resumesetc.

5. Receiving and managing transport ofgoods locally or internationally, gettingdocumentation cleared at customs inliaison with customs officials.

6. Investing and purchasing assets likehigh-end luxury goods or assets likereal estate. These assets form a store ofvalue for later sale.

7. Collecting illicit funds for launderingpurposes, which can be co-mingled withlegitimate funds using cash intensivebusinesses, leaving hardly any papertrail.

8. Assisting with fund movement,performing cash withdrawals andcurrency exchange services.

Different Types of ML Organisations andNetwork:

• Money transport and Cash ControllerNetwork: Used to transmit vast sums ofmoney. They have a strong network andmostly operate globally. They areresponsible for controlling, co-ordinating, collecting and transmitting offunds. They use the account settlementsystem – illicit funds are substituted forlegitimate funds. Unwitting customeraccounts are used for this purpose. Fakeor over invoicing is used to balance thesystem when funds are moved betweenjurisdictions. Cash transportationnetwork is used frequently to physicallymove bulk currencies.

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• Money Mule Network: Money mules, alsoknown as transaction managersphysically transport stolen goods ormerchandise or launder the money.Mostly young unwitting youth areincentivized by free travel and easymoney to undertake this task. They areused to cash counterfeit cheques orpurchase goods using stolen credit cardnumbers, opening bank accounts for fakeonline shopping sites and cybercrimes.The mule under consideration may ormay not be aware that the source offunds that he is moving is not legitimate.

• Digital money and virtual currencynetwork: PMLs arrange for transfer offunds or virtual currencies to e-wallets. Acomplex web of e-wallet transactions isused to obscure the source of funds. Thefunds are finally sent to the e-wallet ofthe client which are then transferred tothe client’s bank cards and can eventuallybe withdrawn in cash.

• Proxy network: Proxy network are PMLswho provide the services of bankingtransfers, particularly multi layeredtransfers, via bank accounts. The mostimportant characteristic of this network isits global operation, i.e. it connects withPML in other countries to enablemovement of funds outside of thecountry of origin of the laundered funds.The challenge of the proxy network is tomove the funds to the pre-determinedaccount and obscure the trail of transfersdone till the funds reach its finaldestination. Where multiple bankaccounts are used to move funds, severalshell companies are also involved.

Tools / Mechanisms Used by PML:

Trade based money laundering: Modusoperandi may involve purchase of high valuegoods, shipping them overseas, selling andtransmitting the proceeds back into theclients’ account as legitimate sale proceeds,phantom shipments, over or under-invoicingof goods being shipped, using illegitimatefunds to purchase goods for legal re-salewith payment being routed directly to theclients (mostly drug dealers) or the use ofmoney brokers to dispose of drug proceedsunder direction from the PML.

SUMMARY

Account Settlement Mechanisms: The modus operandi is such that the PML acts as a middleman between two OCGs that have opposite financial needs. On the one hand there is an OCG who has funds in his bank account but needs cash. On the other side there is an OCG who has cash but needs to remit funds to bank accounts in other countries. Here is where the PML steps in to meet the needs of both these clients through account settlement mechanism.

Underground banking and alternative banking platforms: Used by PMLNs to bypass the regulated financial sector and create a parallel system of moving funds and keeping records of these transactions. Alternative banking platform (ABP) is a banking system which operates outside of the regulatory jurisdiction almost equivalent to the shadow banking system. It uses an online financial software (based on random data generator principal) to manipulate funds across bank accounts.

The full report can be downloaded at:http://www.fatf-gafi.org/media/fatf/documents/Professional-Money-Laundering.pdf

8

Taking AML Maturity in

Bangladesh to the Next

Level

At the recently held Fintelekt Anti-Money

Laundering 3rd Annual Summit in Dhaka, Mr.

Abu Hena Mohd. RazeeHassan, Head,

Bangladesh Financial Intelligence Unit,

highlighted the current challenges and road

ahead for the banking and financial services

industry in Bangladesh.

The AML community in Bangladesh isstepping up its fight against moneylaundering by coming together to improvethe current status of AML controls, puttingpreventive measures in place and increasingregulation and awareness around Anti-Money Laundering (AML) and Combating theFinancing of Terrorism (CFT).

Bangladesh has made significant progresssince the Mutual Evaluation Report in 2009,reflecting political commitment andleadership towards AML and CFT. In 2018, afollow-up Mutual Evaluation Report wasundertaken, in which Bangladesh wasdeemed Compliant for 6 and LargelyCompliant for 23 of the FATF 40Recommendations.

At the recently held Fintelekt Anti-MoneyLaundering 3rd Annual Summit in Dhaka, Mr.Abu Hena Mohd. Razee Hassan, Head,Bangladesh Financial Intelligence Unit,highlighted the current challenges and roadahead for the banking and financial servicesindustry in Bangladesh. According to Mr.Razee Hassan, some of the biggestchallenges faced by Bangladesh include

KEY TAKEAWAYS

9

Mr. Abu Hena Mohd. Razee Hassan, Head, Bangladesh Financial Intelligence Unit, delivering the keynote at the Fintelekt AML 3rd Annual Summit 2019 in Dhaka.

Trade Based Money Laundering (TBML),illegal channels of mobile banking,cybersecurity, de-risking by foreignbanks/termination of correspondentbanking relationships and weak KYCprocedures.

He went on to recommend that for effectiveimplementation of the AML Regime, KnowYour Customer (KYC) and Customer DueDiligence (CDD) norms must be given theirdue weightage. All banks must have a policyfor Prevention of Money Laundering andFinancing of Terrorism, approved by theBoard of Directors (BOD); seniormanagement, with the BOD having thehighest level of commitment towardsfighting money laundering and terroristfinancing. He stressed that banks, financialinstitutions and regulators need to worktogether to take AML/CFT in the country tothe next level.

Also speaking at the summit, Mr. SwapanKumar Biswas, CAMLCO, Mutual Trust Bankand General Secretary - Association of Anti-Money Laundering Compliance Officers ofBanks in Bangladesh (AACOBB) sharedvarious initiatives being taken by theAACOBB to improve the current status ofAML/CFT Regime in Bangladesh. According

KEY TAKEAWAYS

Create a culture of compliance, where being

compliant is a habit and part of everyday life. Once

achieved, there will be no need to balance business and

compliance.

- Swapan Kumar Biswas, CAMLCO, Mutual Trust Bank and General

Secretary - Association of Anti-Money Laundering Compliance Officers of

Banks in Bangladesh (AACOBB)

10

to Swapan, financial institutions in Bangladesh need to put regulations in place to comply with local regulators as well as to match international standards. To make KYC and CDD procedures efficient, centralised account opening processes need to be mandated and communication between financial institutions and BFIU needs to be strong.

(L to R) Jonathan Rogerson, Regional Sales Director, APAC South, Accuity; Swapan Kumar Biswas, CAMLCO, Mutual Trust Bank and General Secretary – AACOBB; Abu Hena Mohd. Razee Hassan, Head, BFIU; Shirish Pathak, Managing Director, Fintelekt Advisory Services; and Mohammad Abdur Rab, Joint Director, BFIU.

A panel comprising AML compliance headsfrom public sector, foreign and privatebanks in the country discussed current AMLchallenges faced by the banks in Bangladeshat the Summit.

According to the panel, challenges faced bybanks and financial institutions inBangladesh include:i) AML compliance not being treated as acore banking function, and seen as a costcentre;ii) Requisite skill sets being in short supply ;iii) Tone from the top has not changedsignificantly;iv) 70%-80% of money laundering is takingplace through Trade Based MoneyLaundering, which is extremely difficult toidentify; andv) Banks and financial institutions areplagued by poor KYC data.

Financial institutions in Bangladesh canimprove their risk assessment practices byreviewing risks before launching allproducts, strengthening their regulatoryguideline framework, giving weightage to thesectors customers are working in along withindividual weightage and by following upwith agents/colleagues who bring inbusiness while assigning risk scores.

KEY TAKEAWAYS

11

A strong need has also been felt to improvetechnology in the country’s banking andfinancial industry. Artificial Intelligence (AI)and data mining need to be introducedwithin organizations. Once a balancebetween AI and data mining is achieved,human intervention can be reduced by ahuge extent.

Organizations need to strengthen ongoingdue diligence. Whenever a customer visits abranch with any request, bank staff shouldtake advantage and to do a re-KYC.Organizations can think of introducingUniform Customer Identification Code(UCIC). Risk Based Approach needs to beintegrated with technology and softwareshould be continuously updated based onreal life cases. Screening lists should beregularly updated in the system.

With discussions taking place among avariety of stakeholders – the BFIU, banks,financial institutions, insurance companies,technology suppliers and consultingcompanies, Fintelekt’s AML 3rd AnnualSummit provided an opportunity for muchdebate as well as actionable takeaways forbanks and financial institutions to act on,towards a stronger AML/CFT regime in thecountry.

(L to R) Shirish Pathak, Managing Director, Fintelekt Advisory Services; Chowdhury MAQ Sarwar, Deputy Managing Director, Eastern Bank, Bangladesh; Mohammad Abdullah Al Mamun, CAMLCO, Dutch Bangla

Bank; Abu Reza Md. Yeahia, CAMLCO, Islami Bank Bangladesh Limited; and Khan M. Ahad, Head, Financial Crime Compliance, Standard Chartered Bank.

Fintelekt’s Advanced AML/CFT Professional (FCAP) Training is a four-day residential intensive training program designed as an advanced refresher for bankers and financial services

ANNOUNCEMENT

Fintelekt

Certified AML/CFT

Professional:

Hall of Fame

professionals across Asia, leading to the FCAP certification. Fintelekt completed its 7th batch of FCAP Training in January 2019 at Mumbai, India.

▪ Baishnab Das Mondal (Agrani Bank, Bangladesh)

▪ Md Asaduzzaman (Agrani Bank, Bangladesh)

▪ Md Tanvir Islam (Agrani Bank, Bangladesh)▪ Md. Asraful Islam Sarkar (Agrani Bank,

Bangladesh)▪ Mohammad Nazad Hossain (Agrani Bank,

Bangladesh)▪ Ranjan Chandra Das (Agrani Bank,

Bangladesh)▪ Rasel Alam Chowdhury (Agrani Bank,

Bangladesh)▪ Suraiya Afrin (Agrani Bank, Bangladesh)▪ Suraya Khan (Agrani Bank, Bangladesh)▪ Iqbal Hossain (Agrani Bank, Bangladesh)

12

▪ Gayan Sanjaya Kumara Batagalle Gedara(Bank Of Ceylon, Sri Lanka)

▪ A S M Shahriar Hossain (bKash, Bangladesh)

▪ Sajib Das (bKash, Bangladesh)▪ Shashi Nepal (Civil Bank, Nepal)▪ Apoorba Prasad Joshi (Kumari Bank,

Nepal)▪ Nirmal Kumar Khatiwada (Kumari Bank,

Nepal)▪ Nabin Lohani (Nabil Bank, Nepal)▪ Sabitri Dahal (Nabil Bank, Nepal)▪ Sunila Pradhan (Nabil Bank, Nepal)▪ Binisha Shakya (NMB Bank, Nepal)▪ Kazi Shafiul Azam (Prime Bank,

Bangladesh)▪ Md. Ershad Ali (Prime Bank, Bangladesh)

FCAP Batch 7 – January 2019, Mumbai

In conversation with Kazi Shafiul Azam, Senior Assistant Vice President and CCC Member, AML & CFT Division, Prime Bank, Bangladesh

Fintelekt: What motivated you to choose the complianceprofession?

Shafiul: Compliance is a challenging and genuinelyrewarding area of work. It positively influences manykey decisions affecting firms as a whole, or even just asingle customer.Following are the reasons I chose compliance as aprofession:• Opportunity to work with regulatory bodies &

correspondent banks worldwide;• Non-traditional work;• IT/IT tools play an important role in compliance, and I

am handy with the same;• Exposure to senior management and decision-

making roles;• Mission-critical tasks;• Dynamic quality of work;• Job security/opportunity.

According to you, what role does your department playin the overall operational health of the organization?

In the context of a bank, compliance operates at twolevels:Level 1 - Implement the instructions and directives ofregulators and the external rules that are imposedupon an organisation as a whole;Level 2 - Compliance with internal systems of controlthat are imposed to achieve compliance with theexternally imposed rules.

INTERVIEW

13

Shafiul has more than 18 years of experience in

various key positions in the banking industry,

ranging from IT to AML at Head Office Level. He joined Prime Bank in

December 2017 as Senior Assistant Vice President

(SAVP) and is currently serving as a Member of

Central Compliance Unit as SAVP of Anti-Money

Laundering Division, Head Office, Prime Bank

Limited. Prior to this, he worked with Export

Import Bank of Bangladesh (2005-2017), The Premier Bank (2004-

2005) and Social IslamiBank (2001-2003).

In detail, what the compliance departmentdoes is:• Identifies the risks that the organisation

faces;• Designs, develops and implements

controls to protect the organisation fromthose risks;

• Monitors and reports the effectiveness ofthese controls;

• Resolves compliance difficulties in theorganization;

• Builds a culture of compliance andadvises the business on rules andcontrols.

What advise do you have for organizationsto balance business and compliancepriorities?

Compliance is expensive, but noncompliancecan cost even more!

INTERVIEW

How did the FCAP Training contribute toyour overall learning and developmentobjective?

The FCAP Training provided me with a goodadvanced level introduction and contextualunderstanding of AML/CFT concepts andhelped me learn about the best practices incombating money laundering, terroristfinancing and proliferation financing.

14

Kazi Shafiul Azam, Senior Assistant Vice President, AML & CFT Division, Prime Bank, Bangladesh receiving his FCAP Certificate from Shirish Pathak, Managing Director,

Fintelekt Advisory Services at Fintelekt Certified AML-CFT Professional Training in Mumbai held from January 28 – 31, 2019

Country Spotlight:Taiwan

Taiwan is an island country in East Asia. Itsneighbouring countries include China, Japanand Philippines. Taiwan is also referred to asthe Republic of China (ROC) or Chinese Taipei.People’s Republic of China (PRC) has alwaysstaked its sovereign claim over ROC, under itsOne China policy. However, Taiwan hasasserted itself an independent state andparticipates in international forums under thename of “Chinese Taipei”.

Banking Industry

Taiwanese banking sector is predominantlystate controlled. The Taiwanese economy isserviced by 39 banks. Of these, 8 major bankshold around 48 per cent of the total bankingassets and are state controlled.

Domestic banks of Taiwan are in a strongposition. Capital adequacy ratios are generallyhigh and non-performing loan (NPL) ratio arequite low. The country has an unusually largenumber of banks as compared to the numberof customers, which cuts down the profitmargins. This is the reason the banks areexpanding their presence in neighbouringcountries.

Taiwan’s banks are voracious lenders toChinese companies. According to a Bloombergpublication of December 2018, Chinesecorporates constituted 54 per cent to the totalbook value of Taiwanese banks’ assets.

COUNTRY SPOTLIGHT

Category Value

Population 23.6 million

(in 2018)GDP Growth Rate 5.25% (in 2018)

Inflation 1.5% (in 2018)

Currency Taiwan New

Dollar (TWD)Currency Exchange

Rate1 USD = 30.84

TWD*Basel AML Index 2018

Rank73, out of 129

countries

World Bank Ease of

Doing Business 2018

Rank

13, out of 190

countries

Transparency

International’s

Corruption Perception

Index 2018 Rank

63, out of 180

countries

*Source: www.xe.com (On March 5, 2019)

15

Taiwan may also seek to establish its presencein South East Asia, which has been encouragedby its state under its “New Southbound policy”.Taiwan plans to target 18 countries in SouthEast Asia, South Asia and Australasia. Taiwan isalso an important player in the AsianSyndicated Loan Market.

The Central Bank of Taiwan is called “CentralBank of the Republic of China (Taiwan)”. It isprimarily responsible for monetary policy andfinancial supervision.

AML Regime

Taiwan is a founding member of theAsia/Pacific Group on Money Laundering (APG).Taiwan is currently undergoing mutualevaluation by the APG.

Taiwan was placed on a "regular follow-up" listby the APG in 2007, requiring it to report backtwo years after the evaluation, but wasdemoted in 2011 on an "enhanced follow-up,"requiring it to report back one year after theevaluation. It was then placed on the"transitional follow-up list" in 2014 after makingsome improvements and was removed fromthat list on July 20, 2017.

The country received a big blow when theirthird largest bank, Mega InternationalCommercial Bank Co. was fined $180 million in2016 by authorities in New York for weak AMLpractices and procedures. Following this, astrong AML framework was implemented in2017, which was then set for evaluation by APG.

Basel AML Index

The Basel AML Index, published by the BaselInstitute on Governance, provides risk ratingsbased on the quality of a country’s frameworkfor AML, CFT and related factors such asperceived levels of corruption, financial sectorstandards and public transparency. Out of 129,rank 1 denotes the highest risk of moneylaundering & terrorist financing in the country,while 129 would be the lowest risk. In 2018,Taiwan was ranked 73 on this index, making itamongst the top 10 countries that havesignificantly worsened their scores since 2017.

COUNTRY SPOTLIGHT

Money Laundering Control Act (MLCA)

The Money Laundering Control Act (MLCA)was drafted on October 23, 1996 and ittook effect on April 23, 1997. It was lastamended in 2016. This Act is enacted toprevent money laundering activities andcombat related crimes, bolster anti-moneylaundering systems, maintain financialstability, increase transparency in moneyflows and strengthen internationalcooperation.

The Anti-Money Laundering Division(AMLD)

The Anti-Money Laundering Division(AMLD), earlier known as the MoneyLaundering Prevention Centre (MLPC), isthe Financial Intelligence Unit (FIU) ofTaiwan. In 1997, in accordance with theMLCA, the Investigation Bureau, Ministry ofJustice (MJIB) was assigned by the ExecutiveYuan (Cabinet) to establish the MoneyLaundering Prevention Centre (MLPC) to actas Taiwan’s FIU.

16

NEWS

Asia Regulatory Updates

Cambodia has been placed on the FATF’sAML and CFT Watch-List

Cambodia has been identified as one of 12jurisdictions with strategic AML and CFTdeficiencies. One of the reasons the countryended up on the list is the growing number ofcasinos, which are seen as a high-risk target formoney laundering.

The Financial Action Task Force (FATF) later saidthat Cambodia has made a high-level politicalcommitment to work with the FATF and theAPG to strengthen the effectiveness of its AMLand CFT regime and address any relatedtechnical deficiencies.

Pakistan stays on FATF’s 'Grey List' forTerror Financing

FATF members voted to keep internationalpressure on Pakistan to clean up its act onterror support and terror financing. Pakistanhas until October 2019 to comply with the 27demands made by FATF members, or it couldface the blacklist. Pakistan was first placed inthe grey list in June 2018.

Indonesia Creates Regulatory Frameworkfor Cryptocurrencies

Indonesia’s Commodity Futures TradingRegulatory Agency (Bappebti) has recognizedcryptocurrency as a commodity, thus legallytradable on the stock exchange. Newregulations have been put in place to providelegal certainty to the crypto futures sector, aswell to protect consumers and investors fromfraudulent individuals.

China Imposes Stricter Anti-MoneyLaundering Rules

The China Banking and Insurance RegulatoryCommission (CBIRC) has issued newrestrictions on financial institutions’ marketentry, internal controls and managementstructures, with an aim to rein in riskytransactions.

The policy document released by the CentralBank outlines requirements for banks totrack capital sources and verify thebackground of shareholders and executives,as well as designate specific individuals tolead AML and CFT efforts.

17

ASIA AML/CFT SUMMIT 2019September 11 - 12, 2019

Hotel Intercontinental Hanoi Landmark 72, Hanoi, Vietnam

• The FATF Recommendations: 21st Century Neo-Colonialism or a Path to a Safer World?

• Lowering the Risk of Compliance Failure

• Combating Trade-Based Money Laundering by Strengthening the Eco-system

• Terrorism Financing, Cross Border Intelligence and Border Security

• The Role of Technology in the Future of AML/CFT Compliance

• Mitigating the Sanctions Risk in AML Compliance

• The Changing APAC FCC Landscape: A Year in Review

• Proliferation Financing

• Reducing Global Suffering Through Vigilant Compliance

• Tax Base Erosion, Profit Sharing and the Intersection of Money Laundering and Tax Avoidance

• Learning from India’s Capital Markets KYC Utility Initiative

Click to see Complete Agenda and Speaker Line-up

Nicholas McTaggartMurinbin Consulting

Lindsay ChanFormer Director, APG

Archana KotechaLiberty Shared

Youngbee DaleAnti-Human Trafficking

Consultant

Tom KeatingeRUSI

Hari Kumar NepalMinistry of Finance, Nepal

Monica BhatiaOECD

Guy SheppardSWIFT

Dr. John CoyneASPII

Abu Hena Md. RazeeHassan; Head – BFIU and Co-Chair, APGML

Liat ShetretProgram Manager,

Egmont ECOFEL

Atty Mel Georgie RacelaExecutive Director

AML Council, Philippines

ASIA AML/CFT SUMMIT 2019September 11 - 12, 2019

Hotel Intercontinental Hanoi Landmark 72, Hanoi, Vietnam

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