TAIPEI, TAIWAN - TAIWAN'S former president Chen Shui-bian has been barred from leaving the island and his office raided on money-laundering allegations implicating him and his family, officials said on Sunday.

Taiwan's coast guards confirmed that Mr Chen on Saturday had been barred by prosecutors from leaving the territory which he led for eight years.

'We received the order from the special investigation unit around 9.20pm last night saying former president Mr Chen was barred from leaving the country,' Mr Hsieh Ching-chin, spokesman for the Coast Guard Administration, told AFP.

Earlier on Saturday, Mr Chen and his wife Wu Shu-chen were questioned by prosecutors over money laundering charges against their family.

Spokesman Chu Chao-liang said prosecutors did not use warrants as they were cooperative while the wheelchair-bound Wu wore a cast and appeared to be in poor health.

Ms Wu claimed that the overseas funds came from her family, Mr Chen's past income as a lawyer, his political donations and their investment proceeds, local newspapers said.

Taiwan has launched a probe into money laundering claims apparently implicating the Chen family following similar moves by Swiss authorities.

Copies of Swiss documents obtained by Kuomintang lawmaker Hung Hsiu-chu showed that Mr Chen's son Chen Chih-chung and daughter-in-law Huang Jui-ching transferred US$31 million (S$44 million) to her Swiss bank accounts in 2007.

The ex-leader was already questioned on Friday but requested 'leaves of absence' for the young couple, whom he said were in the US for academic studies, Mr Chu said.

Mr Chen admitted that his wife had wired abroad US$20 million from his past campaign funds, saying she had done so without his knowledge.

He has denied money laundering.

Mr Chen is already under investigation for allegedly embezzling NY$14.8 million (S$700,000) in special expenses from the government while he was president, and his wife is on trial for corruption and document forgery in the same case.

Mr Chen has admitted using false receipts to claim money from the state, but insisted those funds were used for 'secret diplomatic missions' and not his personal benefit.

Nevertheless, prosecutors found that at least NT$1.5 million had been spent on diamond rings and other luxury items for his wife.

A string of corruption scandals implicating Mr Chen, his family and top Democratic Progressive Party officials has tarnished the party's image and played a part in its defeat in the March presidential vote.

Mr Chen quit the party on Friday after the scandal surfaced earlier in the week. -- AFP