Taiwan Straits

China works hard to prevent any official recognition of the government of Taiwan (formal name “Republic of China”), says David Coates. Consequently for those not already involved with the island on AML issues or in the IT sector there may be a blank space filled by some outdated stereotypes. The spectacle of the ongoing trial of the former President Chen Shui-bien for embezzlement and money laundering may lead to an overly alarmist view of the financial risks in dealing with financial institutions on the island. This article attempts to give a balanced assessment of already coming into view. the current AML scene and highlight potential changes

David Coates is former Director, Financial Crime (AML & CTF), British Bankers’ Association. He may be contacted on email: david.coates@live.co.uk

Scale

Taiwan’s 23 million population form the fifth largest economy in Asia and the fourth largest banking sector. In 2006, Taiwan was the world’s 16th largest economy and the 15th largest trading nation. Taiwan has provided about 20-23% of foreign direct investment in China, sometimes via territories such as the British Virgin Islands or the Cayman islands to get round the previous government’s policy of limiting Taiwanese companies’ investment in China to 40% of their net assets. Taiwan holds the fourth largest foreign exchange reserves in the world, US$293 billion, as a part of strategic security preparations in the event of any crisis with China that might panic the markets.