Taiwanese Financial Institutions Must Comply with AML/CFT Regulations Consistent with FATF Standards
The Taiwanese government has implemented new regulations requiring financial institutions to adhere to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) standards set by the Financial Action Task Force (FATF).
Establishing Policies and Procedures for Watchlist Filtering Programs
Financial institutions must establish policies and procedures for watchlist filtering programs that detect, match, and filter customers and connected parties against sanctions lists maintained by the Taiwanese government or international organizations. These policies and procedures must include:
- Matching and filtering logics
- Implementation procedures
- Evaluation standards
Record Keeping Requirements
Financial institutions are required to maintain records of their name and account filtering operations for at least five years, as per Article 12.
Ongoing Monitoring of Accounts and Transactions
Article 9 mandates ongoing monitoring of accounts and transactions using a risk-based approach. Financial institutions must:
- Utilize information systems to detect suspicious transactions
- Establish internal control procedures to ensure the confidentiality of customer information
Customer Due Diligence (CDD) Measures
Financial institutions are required to conduct CDD measures on customers and their beneficial owners who are Politically Exposed Persons (PEPs). Enhanced CDD measures will be applied for higher-risk PEPs, including those with ongoing influence or family members and close associates.
Insurance Company Requirements
Insurance companies and post offices engaging in simple life insurance business must take reasonable measures to identify and verify whether beneficiaries and their beneficial owners are PEPs before paying out policy proceeds.
Exemptions for Insurance Agents and Brokers
Article 11 exempts insurance agents and brokers from certain AML/CFT requirements, but only if they do not undertake underwriting or claim settlement activities on behalf of an insurance company.
Record Keeping Requirements
Financial institutions are required to maintain records of all business relations and transactions with customers in hard copy or electronic form for at least five years, or as otherwise required by law (Article 12).
Conclusion
The new regulations aim to strengthen Taiwan’s AML/CFT framework and ensure compliance with international standards. Financial institutions are expected to implement the necessary policies and procedures to prevent money laundering and terrorist financing activities.