Kenneth Rijock

Kenneth Rijock

Sunday, September 2, 2012

WILL MONEY LAUNDERERS EXPLOIT NEW TAIWANESE-CHINA FINANCIAL LINKS ?



Two of China's largest banks, the Bank of China and the Bank of Communications, quietly opened offices in Taiwan this summer, as a part of the closer financial relationship that is developing between the two countries. Additionally, a new agreement reportedly executed in August will allow Taiwanese financial institutions to clear Chinese currency transactions. Two Taiwanese banks have reportedly opened branches in China, including the Bank of Taiwan.



Whilst we welcome the strengthening of financial ties between two countries that otherwise engage in bellicose political exchanges, this good news will soon come to the attention of experienced money launderers operating in Asia, and they will be looking to take full advantage of any potential opportunity to place, move and clean dirty money from China, whether it be criminal profits, or the proceeds of corrupt activities.



Though it is premature to look for evidence of cross-strait money laundering, employing these new financial connections, you can be sure that a variety of options is already being considered, especially by money launderers acting on behalf of corrupt Chinese PEPs seeking to move their ill-gotten gains offshore forthwith, in light of the fear generated by the Bo Xilai scandal.

Therefore, Compliance officers at international banks who have relationships with Taiwanese financial institutions, or whose clients regularly conduct substantial trade with Taiwanese companies, would do well to brief bank front line staff to be vigilant for changes in volume and character of transactions from Taiwan, lest they unwittingly allow your bank to become a back-door for illicit Chinese "flight capital."



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