Prosecutors Name FSC, NCC, and MODA for Failure in Combatting Fraud
United Daily News, June 24, 2023
Fraud crimes have become a national security problem in Taiwan, with an accumulated loss of NT$6 billion (about NT$193 million) last year. The administration of President Tsai Ing-wen set up a cabinet-level “Anti-fraud National Team” in 2022 and added an “Anti-fraud Office.” However, the prosecutors in charge of fraud crimes are calling the office a “national-level scam.” In a recent anti-fraud seminar, several prosecutors named the Financial Supervisory Commission (FSC), the National Communications Commission (NCC), and the Ministry of Digital Affairs (MODA) as the three major institutions responsible for the government’s failed efforts in combatting fraud.
Scholar: Government Malfunction Endangering National Security
Professor Lin Yu-hsiung of the Department of Law, National Taiwan University, used data roaming plans as examples to explain that every prepaid sim card could be a “breakpoint” in criminal investigation, whether it is used in phone fraud, drug trafficking, or even national security infiltration. Law enforcement agencies have issued warnings time and again, yet responsible government agencies have been slow to respond. This is not just a government malfunction; it has created a national security loophole.
In July 2022, then-Premier Su Tseng-chang set up an anti-fraud team in the midst of rampant fraud crimes and public grievances. In May 2023, Premier Chen Chien-jen added another NT$1.3 billion (about US$41.8 million) to the anti-fraud budget. However, they seem to have little effect on the scam syndicates, and some prosecutors have pointed to the inaction of responsible government agencies as the reason for aggravated fraud crimes.
One of the responsible agencies is the FSC. The FSC has been named the top answerable agency because it oversees dummy accounts, virtual accounts, online banking, e-payments, third-party payments, and virtual currency merchants. The lack of administrative supervision has caused serious abuses.
Accessibility of Accounts Makes Verification Easy for Scam Syndicates
Chief Prosecutor Lin Yen-chun of the Department of Prosecutorial Affairs, Ministry of Justice, indicated that a quarter of dummy accounts are repeat offenders. However, no efforts have been made by the FSC to establish a sifting mechanism to red-flag those questionable accounts.
The NCC is in charge of digital communications. For not regulating telecom operators to sell excessive telecom numbers, the NCC allows prepaid dummy telecom numbers and corporate telecom numbers via virtual network operators to grow out of control, giving scam syndicates the chance to take advantage of the new online banking services and easy access to verify dubious online payments through mobile phone numbers.
Prosecutor Huang Wei-chieh of the Yunlin District Prosecutors Office indicated that there were some 29,000 tourists traveling from mainland China to Taiwan from January to March this year. However, the five telecom operators in Taiwan have sold more than one million roaming numbers to mainland tourists during the same period. From January to May this year, the five telecom operators own a total of 8.7 million overseas roaming numbers. The prosecutors have found some of the numbers are involved in fraud crimes, yet the NCC has done nothing to investigate the discrepancy. Moreover, the NCC has told the prosecutors that there is no law to regulate them.
The MODA with a star Minister Audrey Tang is regarded by the prosecutors as the agency out of the loop. The MODA has certain jurisdiction over third-party payments and personal virtual currency merchants, yet it does nothing and simply passes the buck. Some prosecutors have criticized the inaction of the MODA and the FSC as condoning crimes.
Prosecutor Cheng Tzu-wei of the Ciaotou District Prosecutors Office indicated that there is no minimum capital requirement or business restriction for third-party payment processors. The prosecutors have found many scam syndicates open their own third-party payment platforms. According to law, those with a business scale of NT$2 billion (about US$64.3 million) and below fall under the MODA’s jurisdiction, but Minister Audrey Tang said she is only “responsible for the development, not supervision.”
FSC: Already Asked Banks to Improve Measures
Prosecutor Lin Ta of the Taipei District Prosecutors Office has pointed out that dummy accounts and roaming numbers are the basis for all fraud crimes. Online banking, third-party payments, and personal virtual currency merchants all derive from dummy accounts and subsequent mobile phone verification. The FSC needs to establish a blacklist of dummy accounts and restrict their access to new accounts. It also needs to reinforce verification for online payments and regulate personal virtual currency merchants. As for the NCC, it needs to reinforce dummy accounts supervision, while the MODA needs to roll out licensing measures for third-party payments so front-end administrative supervision can stop scam syndicates from using it in crimes. Only by taking these actions will the anti-fraud national team not become a laughing stock.
According to the FSC, it has asked the banking association to coordinate the efforts of all its bank members to reduce problems of fake telecom numbers and virtual accounts that are used in e-payments and third-party payments.