Taiwan's former President Chen Shui-bian is alleged to have transported 40 million US dollars to a Palauan bank during a visit to the island nation in September 2006.
Mr Chen, who is still awaiting a court verdict for his alleged involvement in embezzling public funds and international money laundering operations, allegedly carried the money by jet on his second state visit to Palau.
The China Post reports the sum was an additional batch of money diverted abroad by Mr Chen, who was alleged earlier to have shipped 5 million US dollars in cash to Palau.
The information was revealed by US government officials who alerted the Palauan government on the money flow, suspecting it could be related to operations of international terrorists.
The sources said the 40 million US dollars in cash was first deposited into the National Development Bank of Palau.
But the money was later remitted in several batches to financial institutions in the U.S.