Aggressive cybercriminals are targeting Taiwan’s population with increasingly sophisticated scams, highlighting the need for action by regulators and law enforcement.
In early January, Taichung prosecutors charged seven people on suspicion of defrauding a woman out of NT$13.7 million (US$483,000) with a stock investment scam.
The scam, which stands out for its sophistication, highlights the rising risks faced by unsuspecting retail investors. The scammers initially attracted their victim’s attention with an advertisement on Facebook promising expert stock investment advice supposedly endorsed by Starlux Airlines founder Chang Kuo-wei. After adding the “expert” on her Line instant messaging app and downloading an investment app the person recommended, the woman deposited NT$16 million over six separate transactions, Taipei Times reported.
The app provided by the scammers showed that her investment was appreciating, and she was able to initially withdraw a “profit” of NT$2.3 million. The app later showed her initial investment had quadrupled in value. However, when she sought to withdraw the rest of her money, the scammers asked her to pay a “fee” of NT$6 million. Shortly thereafter, acting on a friend’s advice, she contacted the police.
The scam is representative of Taiwan’s increasingly serious financial crime problem. While Li Pei-hsuan, an industry analyst at the semi-governmental Market Intelligence & Consulting Institute (MIC), notes that “online fraud is a global issue, not just a challenge for Taiwan,” the country’s susceptibility to cyber threats is heightened by several factors. These include its affluence, an unusually high savings rate of approximately 25%, and an aging population with ample free time – conditions that create an attractive target for cybercriminals.
Another factor raising financial crime risks for Taiwan is its high internet connectivity, Li says. Taiwan’s smartphone penetration rate is close to 90%, according to Statista, while almost 90% of the population of 23 million use Facebook and more than 95% use the Line messaging app.
Taiwanese lost NT$37.19 billion (US$1.23 billion) to fraud in the final quarter of 2024, according to Ministry of the Interior data. Around 1,600 people lost more than NT$5 million each to fraud, mostly investment scams. About a third of the fraud victims were retired.
Although Taiwan’s economy has performed reasonably well in recent years as measured by GDP growth and export volume, Alex Liu, co-founder and CEO of Taipei-based cryptocurrency exchange MaiCoin, sees signs of a “two-track economy.” Those in the semiconductor sector and its adjacent ecosystem “are doing fantastic,” he says. But “many people in other [non-high tech] industries have been left behind. Wages are stagnant. People are looking for hope, and that makes them more susceptible to fraud.”
Taipei Times highlighted challenges posed by Taiwan’s uneven industrial development in an August 2024 op-ed. The article noted that wage stagnation outside of information communication and technology (ICT) “has persisted since 2000,” a key factor contributing to “the public’s relative sense of deprivation.”
Scammers are also targeting migrant workers in Taiwan. Nearly 30% of migrant workers in Taiwan have been victims of financial fraud, with each person losing an average of NT$7,995, according to a survey published in September 2024 by Taipei Fubon Bank and the nonprofit One-Forty. That is a significant amount of money for them, given that migrant workers’ monthly salaries are typically NT$33,000 (according to Ministry of Labor data). The survey was conducted in June and July 2024 among migrant workers from Indonesia, Vietnam, the Philippines, and Thailand.
Government and industry response
The Taiwan government has responded to intensifying digital financial crime with a combination of new regulations, cooperation with the private sector, and a public education campaign. In July 2024, it enacted the Fraud Crime Hazard Prevention Act (FCHPA). The law applies to a range of industries, but its main target appears to be large platform companies that advertise heavily online in Taiwan: Google, Meta, Line, and TikTok.
“By imposing stringent ad removal timelines, requiring information disclosure and identity verification for advertisers and sponsors, and mandating a fraud prevention plan and annual transparency report, the FCHPA and the Proposed Regulations impose important new obligations on online advertising platforms operating in Taiwan,” law firm Baker McKenzie said of the law in a November 2024 note.
In a December 2024 news release, the Ministry of Digital Affairs said that it “has observed a decline in fraudulent advertisements impersonating celebrities and financial investment” since enactment of the anti-fraud law. “This decline is consistent with the reduced number of user reports for fraudulent ads submitted to online platforms,” the ministry added.
For its part, the Financial Supervisory Commission (FSC) plans to establish a mechanism to flag domestic financial accounts suspected of being used for fraudulent purposes. Additionally, the commission plans to tighten monitoring of financial institutions to ensure they prevent dummy accounts and carefully check credit card transactions.
“Fraud is on the front burner for the FSC,” MaiCoin’s Liu says. He adds that if people call the commission’s hotline to report being defrauded, it’s the careers of the public servants involved that are on the line.
In addition to implementing regulatory measures, law enforcement has collaborated with private companies to develop new anti-fraud tools, notes MIC’s Li. For instance, the Criminal Investigation Bureau partnered with the Taiwanese spam-blocking app Whoscall to introduce a “website check” feature. This system alerts users when they access suspected fraudulent websites and allows them to manually check suspicious URLs.
Taipei Fubon Bank recently joined the Ministry of Digital Affairs’ AI Pilot Program, launching the “Eagle Eye Anti-Fraud Prediction Model.” Built on federated learning technology – which trains central models on decentralized data – the AI-driven model allows financial institutions to share a foundational framework, input their own data, and fine-tune parameters without sharing sensitive information.
“This approach ensures data privacy while enabling institutions to exchange insights on fraud patterns, accelerating model updates and improving fraud detection accuracy,” Li says.
Similarly, Cathay Financial Holdings initiated a federated learning anti-fraud pilot in 2024, collaborating with CTBC Bank, E.Sun Bank, and Shin Kong Bank. By sharing model parameters without exchanging raw data, banks can strengthen their ability to identify fraud patterns specific to their institutions while maintaining data privacy and security, Li says. Results have shown a 20% improvement in identifying suspicious accounts.
Joe Jelinek, research director of Singapore-based financial services consultancy Kapronasia, says that more action by the Taiwanese banking industry can be expected now that the government has prioritized combating cybercrime. “Banks want to ensure customer trust as well as support government efforts to combat fraud and other illicit activity,” he says. “While new [anti-fraud] regulations may increase compliance requirements and related costs, they also help banks in the long run to better manage risk.”
The road ahead
Looking ahead, Taiwan will likely need to regulate the cryptocurrency industry more comprehensively as part of its broader effort to combat cybercrime. “Crypto is not the main fraud story in Taiwan, but it is volatile” and not deeply understood among retail investors or regulators, MaiCoin’s Liu says.
A case in point: in April 2024, the Taipei District Prosecutors Office indicted 32 individuals, including a prominent lawyer, accused of defrauding almost NT$800 million (around US$24.5 million) from their victims. The defendants allegedly persuaded investors to purchase large sums of worthless crypto coins such as MoChange Token, CSO, FITC, NFTC and BNAT, promising their victims lucrative returns. While numerous online resources enable investors to assess the value of cryptocurrencies, they lack the authority and reliability of those available for the stock market and other highly regulated financial assets, which are legally required to disclose certain information to the public.
The defendants are also accused of laundering their illicit proceeds, including purchasing real estate in Yilan County. Additionally, they allegedly hid large sums of cash in various locations across Taipei City and New Taipei City.
Not all illicit online activity involves organized crime, but organized fraud rings often operate with clear divisions of labor, robust financial systems, and coordinated manpower, sometimes spanning multiple countries (such as Southeast Asian nations and China), MIC’s Li says. “Their global reach makes them harder for law enforcement to trace.”
Yet this also creates opportunities for industry and government to collaborate. For instance, Binance, the world’s largest cryptocurrency exchange by volume, said in a May 2024 statement that it worked with Taiwan’s Ministry of Justice Investigation Bureau and the Taipei District Prosecutors Office to solve a major cross-border money laundering case involving digital assets worth roughly NT$200 million. “By creating fake customer conversation records, remittance proofs, and forged identity verification data, the criminals posed as individual cryptocurrency merchants to make their movement of funds seem legitimate,” Binance said in the statement.
Meanwhile, Taiwan’s new anti-money laundering (AML) rules focusing on digital asset service providers took effect on November 30, 2024 – a month earlier than originally planned. The new requirements state that all “virtual asset service providers” operating in Taiwan must establish a local company or branch office under the Company Act and complete AML registration before beginning operations. Even firms already complying with existing AML rules must adhere to the updated standards. The maximum penalties for failing to abide by the new rules are fines of up to N$5 million or a two-year prison sentence.
The rules are consistent with Taiwan’s incremental approach to regulating digital assets and will be a good thing for investors and the industry, says Kapronasia’s Jelinek.
“The new AML rules are likely to increase transparency in Taiwan’s digital assets industry and improve the ability of service providers to safeguard against illicit activity,” he says.
