Reports from Reuters suggest that the Taiwanese Government has reacted to the New York Department of Financial Services's decision to fine Mega Financial Holding $180 million by resolving to update its money-laundering legislation.

Meanwhile, the Taiwanese regulator has opened its own investigation into the state-run bank, according to the newswires. Chen Sung-hsin, the government-appointed chairman of the bank, is not resigning. Indeed, he has hit back at the US regulators by saying that his bank could not obey all the regulations as they are "much tighter than in the past." Reuters has, however, reported that the former chairman, Tsai Yeou-tsair, is a defendant in the US case and has been banned from leaving his country. The contents of the new law-to-be are not yet known, but as it is going to be passed to please the US Government, there are some clues to be found in that government's pronouncements on Taiwan.

Official American quibbles with the Taiwanese AML regime are, essentially, minor ones despite the grumbles of irascible American officials. According to the US State Department, Taiwan lacks the legal mechanisms in place to "freeze terrorist assets" (in American parlance, this means freezing anything the government likes while using terrorism as a vague pretext), it does not enforce US or international sanctions and penalties, and it is not a party to some treaties that the US Government likes, such as the UN Drug Convention of 1988, the International Terror Finance Convention, the UNTOC and the UNCAC (but this is because it is not a member of the UN and it has, in all fairness, enshrined the principles of these treaties in its own laws).

Otherwise, however, it fulfils all the essential US criteria for approval. It has criminalised drug money laundering - a subject dear to American hearts - and money laundering beyond drugs; it has 'know your customer' laws; it forces its banks to report large transactions and suspicions transactions; it forces them to keep records over time; it has the "safe harbour of disclosure protection," a clumsy way of saying that no legal danger attends a disclosure to the authorities; it has criminalised 'tipping off'; it watches the cross-border transport of currency; it has a financial intelligence unit; its law enforcers co-operate with their foreign counterparts to an acceptable degree; it has a system for identifying and forfeiting assets; it has arrangements in place for 'asset sharing' with other countries; it has criminalised terrorist finance, but not as an 'autonomous offence,' which is of concern to the Americans; and it forces its financial institutions to report their suspicions about terrorist finance.

In its latest annual International Narcotics Control Strategy Report, the State Department (to which American refer simply as 'State') says that although illegal in Taiwan, a large volume of informal financial activity takes place through unregulated, and possibly organized crime-linked, non-bank channels. Taiwan has five free trade zones and a growing offshore banking sector, which are regulated by its central bank and Financial Supervisory Commission. Between January and October last year there were 68 money-laundering prosecutions there and seven convictions.

The big badge of shame for Taiwan, concerning its lack of deference towards US prosecutors, comes on page 212 of the report: "In 2014, Taiwan assisted US law enforcement authorities and agreed to freeze a bank account containing nearly $16 million in illicit proceeds tied to a trade-based money laundering scheme in Los Angeles involving Mexican drug cartels and the importation of garments and textiles into the United States. It was the first time Taiwan had facilitated a significant asset seizure as part of a US-based criminal investigation. There is no extradition treaty in force between Taiwan and the United States."

The last major change in Taiwan's Money Laundering Prevention and Control Law seems to have come in 2008, when an amendment to article 3 added seven additional crimes deemed to be serious crimes (chung ta fan tsui) and also lowered the threshold – from NT20 million (about US$658,000) to NT5 million (about US$165,000) – above which the derivation of criminal proceeds from certain crimes constitute a serious crime.