Dear friends, 

The Legislative Yuan passed the amendment ("Amendment") to the Money Laundering Control Act ("Act") on 9 December 2016.  We summarize the key points below.

1. Definition of "money laundering" – The Amendment expands the categories of money laundering activities under Article 2 of the Act to the following:

 A third party transferring or changing the gain of a particular crime with an intention to conceal or disguise the source of a particular crime's gain, or have a third party escape from criminal indictment;

 To cover or hide the nature, source, flowing, location, ownership, disposition and other interest of gain of a particular crime; and

 A participating party receiving, possessing or using the gain of a particular crime.

2. Definition of "particular crimes" – Under the Act, a material crime refers to a crime with a minimum punishment of 5 years or more imprisonment, among others.  The Amendment changes the term of "material crimes" to "particular crimes", and expands the scope to a crime with a minimum punishment of 6 months or more.  The Amendment also includes certain crimes under the Trademark Act, Waste Disposal Act and Tax Collection Act as "particular crimes".  (Article 3 of the Amendment).

3. Definition of "criminal gain" – Determination of "criminal gains" under the Amendment will not be subject to conviction of particular crimes.  (Paragraph 2, Article 4 of the Amendment)

4. Finance leasing business – The Amendment provides that the money laundering control requirements applicable to financial institutions shall apply to finance leasing business. (Paragraph 2, Article 5 of the Amendment)

5. Designated non-financial businesses and personnel – The Amendment provides that when the designated non-financial businesses and personnel provide certain services, they shall comply with money laundering control requirements under the Amendment.  The designated non-financial businesses and personnel include land administration agents, real estate brokerage business, lawyers, notary publics, certified public accountants, trust and corporate service business and other business or personnel who can easily be utilized for money-laundering offenses.  The Ministry of Justice together with the central competent authorities is authorized to promulgate rules in further details. (Paragraphs 3 and 4, Article 5 of the Amendment)

6. Know-your-customer – Financial institutions and designated non-financial businesses and personnel shall conduct know-your-customer procedure on risk basis, including review of the beneficiary in substance.  The relevant information shall be kept for at least 5 years following termination of business relationship or transaction.  The review process shall be strengthened if the clients, beneficiary, their family or a person who has a close relationship with them serve or have served a material political position in domestic or foreign government or international organization. (Paragraphs 1 to 3, Article 7 of the Amendment)

7. Transaction record – Financial institutions and designated non-financial businesses and personnel shall keep necessary transaction records for at least 5 years. (Article 8 of the Amendment)

8. Reporting obligation – For any currency transaction exceeding a certain amount of money, in addition to financial institutions, the designated non-financial businesses and personnel shall also report the transaction to the Investigation Bureau, Ministry of Justice.  Their confidentiality obligation is exempted for such report.  (Article 9 of the Amendment)

9. High-risk country or area – For countries or area with high-risk of money laundering or financing of terrorism, the Financial Supervisory Commission may (1) require the financial institutions to strength the know-your-customer procedure, (2) restrict or prohibit the financial institutions from remitting the money or conduct other transactions with such country or area, and/or (3) take other necessary measure.  (Article 11 of the Amendment)

10. Customs declaration – The passengers who carry New Taiwan Dollars, gold or certain other items with total amount exceeding the threshold shall make a declaration to the customs, which shall further report to the Investigation Bureau, Ministry of Justice.  The Ministry of finance is authorized to consult with the Ministry of Justice, Central Bank of the Republic of China and Financial Supervisory Commission to promulgate the relevant rules in details. (Article 12 of the Amendment)

11. Increase of punishment – For anyone who engages in money laundering activities, the maximum imprisonment is increased from 5 years to 7 years, and the maximum fine is increased from NT$3,000,000 (US$100,000) to NT$5,000,000 (US$170,000).  The attempt offender of money laundering is also punishable. (Article 14 of the Amendment)

12. Offense of unclear source of fund – Anyone who receives, possesses or uses non-comparable property or interest without reasonable justification with any of the following situations: (1) to open an account with a financial institution by a false name, (2) to use an improper method to acquire others' accounts with a financial institution and (3) to circumvent the procedure of anti-money laundering, is subject to an imprisonment from 6 month to 5 years.  (Article 15 of the Amendment)

13. To remove the safe harbor provision for a juristic person – The Amendment removes the safe harbor that the representative of a juristic person can be exempted from criminal liability if he/she can prove his/her endeavor to supervision or prevention from the occurrence of the crime.  (Article 16 of the Amendment)

14. Confiscation – The Amendment expands the scope of property subject to confiscation to the criminal gains being transferred, changed, covered, hidden, received, obtained or used by the offender.  When the money laundering crime is committed by group or via regular ways, the property of offender is subject to confiscation if it can be proved that the property is derived from other illegal activities. (Article 18 of the Amendment)

Stacy Lo / Mark Chen