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Taiwan passed and promulgated the MLCA in October 1996, which was officially implemented in April 1997. It was the first law specified on AML in the Asia-Pacific region. Also, Taiwan is known of a founding member of the Asia-Pacific Group on ML(referred to as APG), complying with Financial Action Task Force (FATF) 40 Recommendations. Pioneering in AML/CFT in the Asia-hgPacific region around 1997. However, in the past two decades, the money laundering typology evolving quickly to a greater scale, it’s no longer confined to the channel of financial institutions, but non-financial sectors, like real estate, notary, accountants and lawyers sectors have been greatly misused. Cash smuggling, organized crime, ponzi-scheme cases, and cross-border telecommunications fraud cases have increased in large amount , resulting in the predicament of investigation held by law enforcement and border agencies. Obviously, Taiwan's MLCA, which has fallen far behind international standards since 2007, was the main cause for the disorder of the money flow. This can as well be found in the APG 2th round mutual evaluation in 2007, Taiwan was placed on the regular follow-up and then re-downgraded to enhanced follow-up in 2011 due to the backward laws and regulations, inadequate implementation of preventive measures by financial institutions, and the lack of ability of law enforcement in financial investigation. In view of this, in 2016, Taiwan formulated the CFT Act, and substantially revised the MLCA, the Company Act, and the related laws such as the MACMA and the Foundations Act in 2018. In 2017, the AML Office of the Executive Yuan was formally established to raise the overall policy planning level of AML. Taiwan has high-level political commitment and support from all walks of life in AML/CFT. Fortunately, in November 2019, Taiwan successfully passed the third mutual evaluation of APG. This paper reviews the APG 3rd round mutual evaluation procedure and results from the perspective of risk-based approach to find the most suitable supervision system for financial institutions. The research method of this paper is based on literature analysis, case analysis and comparative analysis. First of all, through the introduction and analysis of the case of Mega Bank Event, the paper propose a view on the critical elements in AML that financial institutions shall pay efforts on. This paper, throug collecting domestic and foreign journal papers, guidelines, reports, and risk-based problem-solving methods, discuses on the deficiency of the practice of financial sectors including banking, insurance and securities sectors based on FATF Methodology 2013 - Immediate Outcome 4 (IO4 part). Then, in accordance to the FATF and FSRBs mutual evaluation report, and the above-mentioned principles and steps, this paper reviews the mutual evaluation reports of the United States, Singapore, Hong Kong and Taiwan one by one for comparison. The comparison results are used to clarify the problem. This paper also recommend the most appropriate supervision measures and propose suggestions for future legal amendments, including the MLCA, CFT Act, Company Act, especially the use of new technology, the management of virtual asset and the transparency of legal arrangement. The paper aims to propose a solution for administrative and legislative departments and benefit the coming APG 4th round mutual evaluation for Taiwan in the future.
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