SEMINAR IN MANAGEMENT PRACTISE

• Money Laundering Prevention &

Compliance Trends In Banking
• Concept Conversion of Financial
Personnel Working

Badingatus Solikhah D11025001

Instructor
Professor Chia-Ming Sun
 MONEY LAUNDERING PREVENTION AND
COMPLIANCE TRENDS IN BANKING
詹德恩 博士

A. What Is Money Laundering?

Money laundering can be defined as a process in which illegally obtained money, such as
from drug trafficking, terrorist activity or other serious crimes, is given an appearance of
having originated from a legitimate source. The term "money laundering" is derived from
activities carried out by organized crime, which used laundry cleaning businesses to disguise,
"launder," large amounts of cash actually earned through extortion, prostitution, gambling,
and bootlegging (Mulig & Smith, 2008).
Money laundering as mentioned in the Money Laundering Prevention Law refers to the
following acts:
▪ Transfer or alter specific proceeds of crime with the intent to disguise or conceal the source
of specific proceeds of crime, or to enable others to evade criminal prosecution.
▪ Those who conceal or conceal the nature, source, whereabouts, location, ownership,
disposal rights or other rights and interests of specific criminal proceeds.

▪ Accepting, possessing, or using other people's specific proceeds of crime.

The money laundering process takes basically three steps. These steps can be achieved in
one combined transaction or in three separate transactions (Steel, 2004):
1. Placement: In this step, large amounts of illegally obtained cash are placed into the
financial system, used to buy high-dollar goods, or smuggled out of the country. The idea
is to transform the cash as quickly as possible into other types of assets and thus avoid
detection.
2. Layering: This step is performed to hide the source of the illicit funds. Layering is
accomplished by creating complex levels of financial transactions to obscure audit trails
and cloak the true ownership of the funds. Some of the methods used are Electronic
Funds Transfer (EFT), conversion into monetary instruments, investments in legitimate
businesses, and purchase of real estate. In many cases, EFTs are used to shuttle funds
around between offshore banks and shell companies. Since so many EFTs are processed
each day, determining what is legitimate and what is not, can be difficult indeed.
3. Integration: The final step in money laundering integrates the newly future use of the
money will further hide its original source

B. Major Events In Taiwan’s Money Laundering Prevention In Recent Years

▪ In 2007, the second round of evaluation was listed as "General Tracking List"
The results of the second round of evaluation are "reduced tracking", "general tracking",
"intensified tracking" and "non-cooperative countries" from good to bad)

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 ▪ In 2011, due to poor tracking results, it fell into the "General Accelerated Tracking List".
After completing the revision of relevant regulations, it returned to general tracking in
2014.
▪ On August 19, 2016, Mega Bank New York Branch was fined US$180 million
(approximately NT$5.7 billion) by the New York State Department of Financial Services
(NYDFS) for violating the Bank Secrecy Act and Anti-Money Laundering Act, creating a
domestic financial Highest ever fine overseas.
▪ In November 2018, APG completed the third round of on-site mutual evaluation of my
country. In June 2019, a preliminary report was released, and my country reached the
"general tracking" level.

C. Money Laundering Prevention Mechanisms in Banking

▪ The banking industry and other financial institutions designated by the FSC shall allocate
adequate personnel and resources for preventing money laundering and combating
terrorism according to their scale and risks. Give sufficient powers to coordinate and
supervise the prevention of money laundering and combating terrorism, and ensure that
such personnel and supervisors have no part-time jobs that have conflicts of interest with
their responsibilities for preventing money laundering and combating terrorism.
▪ Domestic banks should also set up an independent special unit for preventing money
laundering and combating terrorism under the general manager, the head office law
compliance unit, or the risk control unit.
 "Measures for the Implementation of Internal Control and Audit System for Banking
Industry and Other Financial Institutions Designated by the Financial Supervisory
Commission》

Guidelines to Banks on Money Laundering and Terrorist Financing Risks Assessment and
Relevant Prevention Program:
1. These Guidelines are established in accordance with “Directions Governing Internal
Control System of Anti-Money Laundering and Countering Terrorism Financing of Banking
Sector and Electronic Payment Institutions as well as Electronic Stored Value Card Issuers”
for the purpose of anti-money laundering and countering terrorism financing (AML/CFT)
to cover how banks identify and assess money laundering and terrorist financing (ML/TF)
risk in businesses and establish AML/CFT programs, etc., as a basis for implementation.
2. A bank’s internal control system and its amendment should be approved by the Board of
Directors. In addition, the internal control system should include relevant written policies
and procedures for identifying, assessing and managing ML/TF risks, AML/CFT programs
based on risk assessment results, and the periodic review of such policies, procedures and
programs.
The purpose of a risk-based approach is to help a bank develop prevention and
mitigation measures that are commensurate with the ML/TF risks identified, determine the
allocation of resources on AML/CFT, establish internal control system, and establish and
implement policies, procedures and measures that are necessary in AML/CFT programs.
Banking businesses, such as consumer banking, corporate banking, investment
services (or wealth management), and correspondent banking, etc., are diversified.

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 Therefore the ML/TF risks associated with each business are different. A bank should take
such business diversity into account when assessing and mitigating ML/TF risks.
The examples provided in the Guidelines are not mandatory requirements. A bank’s
risk assessment mechanism should be commensurate with its business nature and scale.
For a bank that is relatively small or has relatively simple businesses, a simple risk
assessment is sufficient. For a bank that provides relatively complex products and services,
has multiple branches (or subsidiaries) providing diversified products, or has diversified
customer groups, however, is required to perform a relatively sophisticated risk
assessment.
3. A banks should take appropriate measures to identify and assess its ML/TF risks, and
determine specific risk categories based on the risk identified, in order to further control,
mitigate or prevent such risks.
Such specific risk category should cover at least geographic areas, customers, and
products, services, transactions or delivery channels, etc. A bank should further analyze
each risk category to determine detailed risk factors.
a. Geographic risk:
1) A bank should identify geographic areas that are exposed to higher ML/TF
risks.
2) When building up a list of high-risk areas, a bank may determine appropriate
risk factors based on the practices of branches (or subsidiaries) and its needs
b. Customer risk:
1) A bank should take an overall account of a customer’s background,
occupation, characteristics of social and economic activities, geographic areas,
and an entity customer’s organization type and structure, etc., to identify the
customer’s ML/TF risks.
2) When identifying a customer’s risk and determine the customer’s level of risk,
a bank may perform risk assessment based on following risk factors:
a) Geographic risk of the customer: Determine the level of risk of the
customer’s nationality and country of residence based on a list of areas
that are exposed to ML/TF risks defined by the bank.
b) Occupation and industry risk of the customer: Determine the level of risk
of the customer’s occupation and industry based on a list of occupations
and industries that are exposed to money laundering risks defined by the
bank. High-risk industries include, for example, cash-intensive businesses,
or companies or trusts that tend to be used as personal asset-holding
vehicles, etc.
c) Individual customer’s employer.
d) The channel used by the customer to open account and establish business
relation.
e) The transaction amount with which the customer first establishes
business relation.
f) Products or services that the customer applies.
g) Whether the customer has other high ML/TF risk characteristics. For
example, the customer fails to provide a reasonable explanation
regarding the significant geographic distance between the customer and

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 the branch; the customer has nominee shareholders or shares in bearer
form; the extent of complexity in an entity customer’s ownership
structure, such as whether the ownership structure is apparently unusual
or excessively complex given the nature of the customer’s business.
c. Product, service, transaction or delivery channel risk:
1) A bank should identify products, services, transactions or delivery channels
that have higher ML/TF risk based on the nature of individual product, service,
transaction or delivery channel.
2) A bank should, before launching a new product, service or business (including
new payment method, applying new technology on existing or new product
or service), perform ML/TF risk assessment and establish relevant risk
management measures to mitigate the risks identified.
3) Examples of individual product, service, transaction or delivery channel risk
factors are as follows:
a) The extent of associating with cash.
b) The channel to establish business relation or process transaction,
including whether it allows non-face-to-face transactions, and whether it
is a new payment method such as electronic banking.
c) Whether it allows high amount of money or value transfer. (4)
Anonymous transactions.
d) Payment received from unknown or un-associated third parties.
4. A bank should establish multiple levels of customer risk and rules to determine the level
of customer risk.
Customer risk should have at least two levels, “high-risk” and “general risk”, as
bases to determine the extent of customer due diligence and ongoing monitoring. For
a bank that adopts only two risk levels, the bank should not take simplified measures
to a customer rated as “general risk” because “general risk” is still higher than “low
risk” provided in Paragraph V and VII of the Guidelines.
A bank should not disclose a customer’s level of risk to the customer or any person
that is unrelated to AML/CFT obligations.
5. A bank should directly treat foreign political exposed persons, terrorists or terrorist groups
that are sanctioned, identified or investigated by foreign governments or international
AML organizations, and designated individuals or entities sanctioned under Counter-
Terrorism Financing Act as high-risk customers. In addition, a bank may determine the
types of customers that should be directly treated as high-risk customers based on its
business type and relevant risk factors.
A bank may, based on the results of an overall written risk analysis, define the types
of customers that can be treated as low-risk customers. The results of the written risk
analysis should be sufficient to explain that such types of customers are commensurate
with lower risk factors.
6. With respect to a new customer to establish business relation with a bank, a bank should
determine the customer’s level of risk when establishing business relation
With respect to an existing customer with a specific level of risk, a bank should re-
assess customer risk in accordance with its risk assessment policies and procedures.
Although a bank performs customer risk assessment when establishing business relation

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 with a customer, for certain customers, the overall risk profile become clear after the
customers use accounts to transact. Therefore, a bank should conduct due diligence to
existing customers on the basis of materiality and risk, and, at appropriate times, review
the existing business relationships and adjust the level of risk after taking into account the
time and information sufficiency of last due diligence. Such appropriate times should at
least include:
a. When the customer opens a new account or establishes a new business relation.
b. Time to conduct periodic review determined on the basis of the customer’s
materiality and risk.
c. When a bank knows a material change occurs in the customer’s identification and
background information.
d. When the bank reports a suspicious ML/TF transaction or other events that may
result in substantial change in customer risk profile occur.
A bank should review periodically the sufficiency of the information for identifying
customers and beneficial owners, and ensure the update of such information.
Especially, high-risk customers should be reviewed at least annually by the bank.
7. A bank should establish control measures according to the risks identified to mitigate or
prevent such money laundering risk. A bank should determine appropriate control
measures according to a customer’s level of risk
With respect to such control measures, a bank should take different measures to a
high-risk customer and a customer with a specific high-risk factor to effectively manage
and mitigate identified risks. Following are examples:
a. Conduct enhanced due diligence, such as:
1) Obtaining relevant information on the purpose of an account or relationship:
the expected use of the account (for example, the amount, purpose and
frequency of expected transactions)
2) Obtaining information on an individual customer’s source of wealth, source
and destination of funds, and types and quantities of assets, etc. If the source
of funds is deposit, a bank should further understand the source of such
deposit.
3) Obtaining an entity customer’s further business information: understand the
customer’s latest financial situation, commercial activities and business
relationship information to establish the source of assets, source of funds and
destination of funds.
4) Obtaining information on the reason for intended or performed transactions.
5) Conducting site visit or phone interview, according to customer type, to
validate a customer’s operation situation
b. Obtain the approval of senior management, defined by the bank considering
internal risks, before first establishing a business relation or establishing a new
business relation.
c. Increase the frequency of customer due diligence.
d. Conduct enhanced ongoing monitoring of the business relationship
Except in the situation described in Subparagraph 1 of Paragraph 3 of Article 6 of
the Template, a bank may take simplified measures in a lower risk situation in
accordance with its risk prevention policies and procedures. Such simplified measures

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 should be commensurate with the lower-risk factors. Examples of simplified measures
that may be applied include:
1) Reducing the frequency of updates of customer identification information.
2) Reducing the degree of ongoing monitoring and scrutinizing transactions based on
a reasonable monetary threshold.
3) Exempting from collecting specific information or conducting specific measures as
to the purpose and nature of business relations if a bank may infer this from the
type of transactions or business relations.
8. A bank should establish a mechanism of periodic enterprise-wide ML/TF risk assessment
and generate a risk assessment report to enable senior management to timely and
effectively understand the bank’s overall ML/TF risks, determine necessary mechanisms
to be established, and develop appropriate mitigation measures
A bank should establish a mechanism of periodic enterprise-wide ML/TF risks
assessment based on following risk factors:
a. The nature, scale, diversity and complexity of businesses.
b. Target markets.
c. Volumes and sizes of bank transactions: considering the usual transaction
activities of the bank and characteristics of its customers.
d. Management data and reports related to high risk: such as the number and
proportion of high-risk customers; the amount, volume or proportion of high-risk
products, services or transactions; the amount or proportion of customer’s
nationality, place of registration or operation, or transactions that involve high-
risk areas.
e. Businesses and products, including the channels and manners that a bank uses to
provides customers businesses and products, and the way to conduct customer
due diligence, such as the extent of using information system and whether relying
on third parties to perform due diligence.
f. The examination results of internal auditors and supervisory authorities
When a bank performs the enterprise-wide ML/TF risk assessment described in
last paragraph, in addition to taking into account such risk factors, it is suggested to
supplement the assessment with other information obtained from internal or external
sources, such as:
a. Management reports provided by the bank’s management (such as head of
business unit, relationship managers, etc.)
b. Relevant AML/CFT reports published by international anti-money laundering
organizations and other countries.
c. Information of ML/TF risk released by the Competent Authorities.
A bank’s enterprise-wide ML/TF risk assessment results should be used as a basis
to develop AML/CFT programs. A bank should allocate appropriate headcounts and
resources based on such results and take effective countermeasures to prevent or
mitigate risks.
If a material change occurs to a bank, such as a material incident, material
development in management and operation, or relevant new threats, a bank should
re-perform the assessment.

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 A bank should file the risk assessment report to Financial Supervisory Commission
when it is completed or updated.
9. A bank should implement policies established in accordance with the Guidelines after
obtaining the approval of the Board of Directors, and file such policies with the bank’s
“Directions Governing Anti-Money Laundering and Countering the Financing of Terrorism”
to Financial Supervisory Commission. Such policies should be subject to annual review.
The rules provided in this paragraph also apply to the amendment of such policies.

D. Responsibilities of the Special Unit for the Prevention and Control of Money Laundering in
the Banking Industry
▪ Oversee the planning and implementation of money laundering and terrorism risk
identification, assessment and monitoring policies and procedures.
▪ Coordinate and supervise the implementation of comprehensive money laundering and
terrorism risk identification and assessment.
▪ Monitor risks associated with money laundering and terrorism.
▪ Develop anti-money laundering and anti-terrorism programs.
▪ Coordinate and supervise the implementation of anti-money laundering and anti-terrorism
programs.
▪ Confirm compliance with laws and regulations related to preventing money laundering and
combating terrorism, including relevant templates or self-discipline regulations set by the
financial industry association and approved by the association for reference.
▪ Supervise the reporting of suspected money laundering or terrorist financing transactions
to the Investigation Bureau of the Ministry of Justice, as well as the notification of property
or property interests and their locations designated by the Terrorism Prevention and
Control Act.

E. The banking industry performs those money laundering prevention operations

▪ Confirm customer identity.
▪ Name and title checking of customers and counterparties of transactions.
▪ Ongoing monitoring of accounts and transactions.
▪ Remittance bank business.
▪ record keeping.
▪ Declaration of currency transactions over a certain amount.
▪ Suspected money laundering or terrorist financing transaction declaration.
▪ Staff selection and appointment process.
▪ Ongoing employee training program.
▪ An independent audit function to test the effectiveness of the anti-money laundering and
anti-terrorism system.
▪ Other matters in accordance with laws and regulations related to the prevention of money
laundering and the fight against terrorism and the Association.

F. Case
▪ The former manager of China Trust Commercial Bank Nanzhongli Branch107year1month
to110year1Abnormal funds transactions between customers and customers, the number
of affected customers35person, amount involved1.9100 million yuan; the former manager

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 of Shipai Branch, Ye108year5month to110year6Abnormal funds transactions between
monthly and customers, affected objects17person, amount involved4,686million.
▪ Some of the transactions related to the case were transferred or cashed out through
several personal accounts of your bank. Your bank failed to prudently check the derivative
warning messages related to the case, and the abnormal transaction inspection mechanism
was not perfected, so it could not be detected immediately. Abnormal transaction
behavior, check the deposit account with money laundering prevention or related
deficiencies in continuous monitoring of transactions.
▪ Penalty time:2021.12.28
▪ Penalty Amount: New Taiwan Dollars1,400Thousands of dollars in fines.

G. What is legal compliance

▪ Compliance : obedience to a rule, agreement, demand, etc. (Longman) rightobedience to
regulations, agreements, requirements .
▪ Compliance function,OneAn independent function that can identify, assess, make
recommendations, monitor and report on bank compliance risks. "(Basel Committee)
▪ That is, when the bank fails to comply with the relevant laws, regulations, codes of conduct
and ethical standards, the bank will be subject to prosecution or competent
authorities.Disciplinary risk, or in the property, goodwillsuperiordamage.

H. Differences between legal affairs and legal compliance

job title Legal Legal compliance

lawyer inside the bank Those who urge banks to follow bank
management laws, such as paying attention
Role to the adequacy of bank reserves, the safety
of online transactions, and the risks of fund
transactions.

The gatekeeper of The second-tier risk controller can understand

contracts and contracts where risks are hidden and has the ability to
work content
between banks and integrate cross-departmental risk prevention.
customers

Not necessarily a lawyer. But to understand

Most of them are qualified
as lawyers or graduated
qualifications
from the law department
with practical experience
the laws and regulations, you must have rich
experience in financial practice, understand
the business, and be familiar with the
operation of the entire bank.

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I. Origin of decree compliance
▪ America1930Year,1940Relevant laws and regulations were promulgated in Set up
ordinance compliance units.
▪ In Taiwan in 1998 in the Credit Union Act to regulate ordinance compliance systems, rather
than starting with banking. current regulations, financial The holding company and the
head office of the banking industry shall establish a legal compliance unit under the general
manager, responsible for the planning, management and implementation of the legal
compliance system, and assign a senior executive to serve as the legal compliance
supervisor of the head office to comprehensively manage legal compliance affairs, at least
Report to the board of directors (council) and supervisors (supervisors, board of
supervisors) or the audit committee every six months Report. Measures for the
Implementation of the Internal Control and Audit System of Financial Holding Companies
and the Banking Industry»

J. US Law Make Follow The System To Check The Content

▪ U.S. Financial Supervisory Authoritymakefollow inspectionContent willdepending on

banking,scale anddifferent.
▪ Divided into the following for foreign banks:
1. Financial Record Keeping and Reporting RequirementsFinancial Recordkeeping and
Reporting Regulation
2. assetsfluiditymaintainAsset Maintenance
3. Adequate asset pledgesexAsset Pledge and capital Equivalency Deposits
4. suspicious transactionSuspicious Activities
5. overseasbusinessInternational Banking Facilities
6. Review regulationsReportReview of Regulatory Reports
7. Other compliance matters

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K. Decree Compliance Unit Settings
▪ If the total assets of the banking industry that have been audited and certified by an
accountant in the previous year amounted to NT$1 trillion or more, a dedicated legal
compliance unit should be set up, which may also handle matters related to preventing
money laundering and combating terrorism.
▪ However, it shall not concurrently handle legal affairs that are not related to the planning,
management and implementation of the legal compliance system, or other business that
has conflicts of interest with their duties.
▪ Its head office is in charge of compliance with laws and regulations, and may also serve as
the director of the special unit for preventing money laundering and combating terrorism.
However, they shall not concurrently serve as the supervisor of the legal unit or other
internal positions.
▪ For financial holding companies and banking industries to which the preceding paragraph
does not apply, the head of the head office for compliance with laws and regulations shall
not concurrently hold other internal positions except for the head of the legal affairs unit
and the head of the special unit for preventing money laundering and combating terrorism.

L. Law to Follow Unit position

▪ Establish Clear and appropriate laws and regulations communication, consultation,
coordination and communication system.
▪ Confirm that all operating and management regulations are updated in a timely manner in
line with relevant laws and regulations, so that all operating activities comply with laws and
regulations.
▪ Before the banking industry launches various new products and services and applies to the
competent authority to start a new business, the legal compliance supervisor shall issue an
opinion in compliance with laws and internal regulations and be responsible for signing it.
▪ Formulate the evaluation content and procedures for compliance with laws and
regulations, and supervise each unit to periodically self-evaluate the implementation
situation, and evaluate the effectiveness of self-assessment of laws and regulations of each
unit.
▪ Appropriate and appropriate legal training shall be given to the personnel of each unit.
▪ It should supervise the introduction, establishment and implementation of relevant
internal norms in compliance with the laws and regulations of each unit.

M. Three Lines of Defense

Internal control system include
➢ first line of defense--Self-check (risk monitoring)
➢ second line of defense--compliance with laws,Risk management (risk monitoring)
➢ third line of defense--Internal Audit (Independent Oversight)

N. The Most Appropriate Legal Compliance System

▪ Consider the size and culture of the bank
▪ Ability to provide employees with legal complianceConsulting and auditing,establish legal
compliancefollowsurroundings(culture)

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▪ give to employeesLawfollow the training
▪ serveCompetent Authority Contact Window
▪ Responsible for treating guests fairly,assistHandling of major customer complaints
▪ Investigate major deficienciesandfraud
▪ Compliance management system is helping companies effectively tackle regulatory needs

Having a good compliance management system can help your business in many ways. It can
help you attract more customers, make the stakeholders of the company happy and reduce
the difficulties of legalities. Following all the regulations can be a difficult job. If someone
makes a mistake in this regard, finding a solution for the same would be quite easy if you have
compliance system in place. There are many other advantages of legal compliance
management solutions and the following points will shed more light on the same:
• Improve your reputation :
A company which follows all the laws effectively will easily win the trust of its customers.
It is good for PR of the company. As you will using an entire compliance management
system, you can easily market your company as a just and trustworthy name. Audits can
help you significantly in this regard.
Due to your selection of compliance management system, you will encounter no
problems with legal audits. You can have an audit from an external institution too instead
of an internal audit. It is a great advantage of choosing such a solution. Having a good
reputation in the market can help your company in many ways.
You will be able to generate leads faster, build a better customer base and enhance your
revenues. Your good will would increase which will help you a lot in marketing your brand.
Gaining the trust of new customers is quite difficult because the competition level is very
high. The compliance management software India based will help you a lot in this regard.

• Avoid legal issues :

The most straightforward benefit of having a compliance management system is that you
will not face any legal issues. Your business will be operating within the legal boundaries
and regulations. Therefore, the chances of facing any legal trouble would be minimum.
Legal trouble can lead to significant losses for the business and that is why it is important
to avoid that at all costs.
You will not have to put much effort in this regard as well. The software will manage things
accordingly and you will just have to supervise all the activities. Your staff will be able to
perform better and achieve a higher productivity because they will have a proper idea of
their progress in this regard. Managing the compliance will not be difficult in any case.
Apart from that, the corporation will find it easier to store the data of the customers and
handle it.

• Precise compliance :
With the help of software solutions, you can be certain that there would no errors. You
can work freely and remove the worries present in this regard. Moreover, the entire
compliance process will become faster and efficient with a proper system in place.
Thus, you should not hesitate in getting a legal compliance solution. If you have any
additional queries, you can freely contact us. We will surely get back to you and help you
remove any doubts.

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O. Case
▪ The communication mechanism of the three lines of defense of Farglory Life's internal
control, the legal compliance system and the project inspection operation, the internal
audit operation, the operation of the board of directors and the audit committee, failed to
effectively exert their functions, and the failure to manage and control the return of the
travel insurance request letter was not effective. Indeed, the blacklist database for anti-
money laundering and anti-terrorist operations was not archived, the customer name or
name verification operation was not implemented, the writing of foreign investment
reports was incomplete, and the processing of information security monitoring and system
updates was delayed. . Failure to report the results of the review after the sale of the
product to the board of directors, etc., may violate laws or regulations or hinder sound
management.
▪ Penalty time:2020.3.24
▪ Penalty Amount: NewTaiwan dollar350ten thousandYuan fine.

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 CONCEPT CONVERSION OF FINANCIAL PERSONNEL WORKING
IN THE MAINLAND WITH AVAILABLE RESOURCES
簡志豪

A. Accounting System
The accounting standard that use in Taiwan (CFRS vs. IFRS) are:
▪ For Medium and large companies, listed companies using Accounting Standards for
Business Enterprises (gradually convergingIFRS)
▪ For Small Businesses using Small Business Accounting Standards

B. Accounting Processing Concepts

▪ Paid-up capital: 2013 The annual adjustment from the paid-in system (capital verification
report is required) to the subscription-based system.
▪ Tax payable subjects (liabilities), payable value-added tax, income tax, etc. are all calculated
here.
▪ Undistributed profit: IFRS retained earnings.
▪ Business tax and surcharges: Taxes and surcharges other than VAT.
▪ Cost carry-over: first settle to the "production cost", the intermediate account of monthly
material and labor cost carry-over, and then transfer to the work-inprogress, process
products and other accounts.
▪ Recognition of income: main business income, other business income, non-operating
income.

C. Export Tax Rebate

That is, the business tax declaration filed in Taiwan newspaper 401, 403.
The mainland applies directly in the system, and the The export tax rebate system will directly
capture customs funds material, the calculation is fast, and the accuracy is also high. Through
the adjustment of the export tax rebate rate, the In order to better cooperate with the national
industrial policy, Better to encourage exports or inhibit exports.

D. Agricultural Product Purchase Invoice

Invoices for purchase of agricultural products by "Self-issued by the acquiring company", the
input tax can be deducted according to the purchase price at a deduction rate of 9%. For the
production or entrusted processing of goods with a tax rate of 13%, an additional 1% input tax
will be deducted in the current period.

E. Criminal Law: 201 Crime Of Evading Tax, 203 Evading Tax Payment
▪ Article 201 of the Criminal Law: The crime of evading the payment of taxes shall be
sentenced to fixed-term imprisonment of not more than three years or criminal detention,
and a fine; if the amount is huge and accounts for more than 30% of the tax payable, the

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 sentence of fixed-term imprisonment of not less than three years but not more than seven
years shall be imposed. imprisonment and fines.
▪ Article 203 If the taxpayer fails to pay the tax due and adopts the means of transferring or
concealing the property, so that the tax authority cannot recover the unpaid tax, and the
amount is not less than 10,000 yuan but less than 100,000 yuan, he shall be sentenced to
a fixed term of not more than three years. Imprisonment or criminal detention,
concurrently or solely with a fine of not less than one time but not more than five times
the amount of tax in arrears; if the amount is more than 100,000 yuan, he shall be
sentenced to fixed-term imprisonment of not less than three years but not more than
seven years, and shall also be sentenced to not less than one time but not more than five
times the amount of tax in arrears. The following fines.
▪ Article 211 Units violate Articles 201, 203, 204, 207, 208, and 209 of this section Those who
commit crimes specified in this article shall be sentenced to a fine, and the persons in
charge who are directly responsible for the crime and other persons who are directly
responsible shall be punished in accordance with the provisions of each article.
▪ Article 212 Anyone who commits the crimes specified in Articles 201 to 205 of this section
and is sentenced to a fine or confiscation of property shall be subject to the taxation
authority and the defrauded property before execution. Export tax rebate.

F. Superstar: Fan Bingbing's Tax Evasion Case

Fan Bingbing and his company have been punished by the tax authorities. 4Administrative
penalties:
1). Tax collection against Fan Bingbing and the enterprise serving as its legal representative
2.55100 million yuan, plus late fee 0.33 billion;
2). Taking Fan Bingbing to Split the Contract to Hide Real Income for Tax Evasion4times the
fine 2.4100 million yuan, and the tax evasion shall be imposed on the use of studio
accounts to conceal the true nature of personal remuneration. 3 times the fine 2.39
billion;
3). Tax evasion and tax evasion for companies with Fan Bingbing as the legal
representative1times the fine 94.6million;
4). Failure to withhold and pay individual income tax and illegally facilitated and underpaid
taxes to the two enterprises that served as legal representatives of Fan Bingbing
0.5times the fine, respectively 0.51 billion, 0.65 billion.

Administrative penalties total up to 8.8billion

Result
▪ Our bureau complies with Articles 32 and 63 of the Tax Collection and Administration
Law of the People's Republic of China, as well as Articles 2, 10 and 11 of the Individual
Income Tax Law of the People's Republic of China and the According to Articles 1 and
19 of the People’s Republic of 2.99billion.

Seminar in Management Practise | Final Exam| Badingatus Solikhah 14

 ▪ Among them, the tax collection according to law 7179.0310,000 yuan, plus a late fee
888.98 million;
▪ Penalty for tax evasion by changing the nature of income4times the fine
3069.57million;
▪ The tax evasion part of the so-called "capital increase" that completely conceals the
income shall be punished5times the "top grid" penalty, counted 1.88billion.
▪ According to the relevant provisions of Article 44 of the "Administrative Punishment
Law of the People's Republic of China", the First Inspection Bureau of the Shanghai
Municipal Taxation Bureau served Zheng Shuang with the "Notification of Tax
Administrative Penalty Matters", and Zheng Shuang did not apply for a hearing. After
that, Zheng Shuang was formally issued the "Decision on Tax Treatment" and "Decision
on Tax Administrative Penalty" to Zheng Shuang according to the law, restricting him
to pay taxes, late fees and fines within the specified time limit. At present, Zheng
Shuang has paid all taxes and late fees within the specified time limit.

G. Bonded? What Tax Is Insured?

1). Bonded (bonded;under bonded)
The bonded system is an internationally accepted customs system. Yes It refers to a
customs supervision business system in which goods imported by domestic enterprises
approved by the customs are stored, processed and assembled in designated places within
the country under the supervision of the customs, and the payment of various import taxes
and fees is suspended.

2). The main form:

- First, bonded warehouses, bonded areas, consignment sales and duty-free shops serving
international commodity trade;
- The second is processing with incoming materials, bonded factories and bonded groups
for processing and manufacturing services.

3). Main policy:

- Imported production equipment and self-use machinery and equipment, building
materials and a reasonable amount of office supplies are exempt from customs duties
and import taxes;
- Goods entering and leaving abroad and within the region are exempt from customs
duties and import taxes;
- Materials used for processing and export are exempt from customs duties and import
taxes. When imported materials are used to process products for domestic sales,
customs duties and import taxes are calculated and paid according to the import prices
of the materials

Seminar in Management Practise | Final Exam| Badingatus Solikhah 15