Financial Crime World

Banking Industry Faces Scrutiny Over Remuneration and AML/CFT Compliance

Regulators are cracking down on banks’ remuneration practices and anti-money laundering/combating the financing of terrorism (AML/CFT) compliance to ensure transparency and accountability.

Remuneration Transparency

According to new regulations, banks in Taiwan must disclose the remuneration of top executives, including:

  • Directors
  • Supervisors
  • General managers
  • Chairpersons of the board

The information will be published annually, with a breakdown of:

  • Salaries
  • Bonuses
  • Other benefits for each individual

Failure to comply with the disclosure requirement may result in administrative fines ranging from NT$500,000 to NT$10 million.

AML/CFT Compliance

The banking sector is under pressure to improve its AML/CFT practices. The Financial Supervisory Commission (FSC) has introduced stricter regulations governing:

  • Customer due diligence
  • Suspicious transaction reporting

Under the new rules, banks must:

  • Conduct risk-based customer due diligence, verifying the identity of customers and their beneficial owners
  • Report all suspicious transactions to the Investigation Bureau under the Ministry of Justice
  • Maintain a list of red flags for identifying potential money laundering and terrorism financing activities

Banks are encouraged to develop their own criteria based on factors such as:

  • Customer profile
  • Transaction characteristics
  • Internal risk assessment

Depositor Protection Regime

Taiwan’s deposit insurance scheme is also under scrutiny. The Central Deposit Insurance Corporation (CDIC) provides coverage up to NT$3 million for deposits in insured financial institutions.

The CDIC was established in 1985 and is responsible for managing the deposit insurance system, covering a range of deposits including:

  • Checking accounts
  • Demand deposits
  • Time deposits
  • Certain government-mandated deposits

Bank Secrecy

Banks are required to maintain customer confidentiality under the Banking Act. However, this secrecy can sometimes be compromised in cases where there is a legitimate need for disclosure, such as:

  • Investigation of criminal activity

Conclusion

The banking industry in Taiwan faces a range of regulatory challenges, from remuneration transparency to AML/CFT compliance and depositor protection. As the sector continues to evolve, it is essential that banks prioritize transparency, accountability, and customer trust.