CPA Requirements for Customer Due Diligence (CDD) and Ongoing Monitoring

In an effort to strengthen anti-money laundering (AML) and counter-terrorist financing (CFT) measures, the Financial Supervisory Commission has introduced new regulations for Certified Public Accountants (CPAs) in Taiwan. These rules aim to enhance the risk-based approach to CDD and ongoing monitoring of business relationships.

Risk-Based Approach

Under the new regulations, CPAs must conduct a risk assessment of their clients to determine whether they require enhanced due diligence measures. The following factors will be considered:

• Client reputation
• Business activities
• Geographic location

CPAs are also required to update their risk assessments regularly to ensure that they remain effective.

Customer Due Diligence (CDD)

CPAs must conduct CDD on all new clients before entering into a business relationship with them. The CDD process involves:

• Verifying the client’s identity
• Understanding their business activities and intentions
• Assessing their reputation
• Obtaining documentation and information about the client’s source of funds

Ongoing Monitoring

Once a business relationship has been established, CPAs must conduct ongoing monitoring to ensure that it remains consistent with the initial CDD findings. This includes:

• Reviewing transaction records
• Monitoring for suspicious activity

Suspicious Transaction Reporting

CPAs are required to report any suspicious transactions to the Investigation Bureau within two business days of recognition. In urgent situations, a written report may be followed up with a fax or other electronic means.

Record Keeping

CPAs must maintain all relevant transaction records and CDD information for at least five years after the termination of a business relationship or an occasional transaction. Records must be sufficient to permit reconstruction of individual transactions and provide evidence for prosecution purposes.

Sanctions List Compliance

CPAs are required to check the sanctions list announced by the Ministry of Justice regularly and ensure that they do not engage in any activities with designated individuals, legal persons, or entities.

Effective Date

These regulations will come into effect on [date] and will apply to all CPAs operating in Taiwan.

By strengthening AML/CFT measures, these regulations aim to protect the integrity of the financial system and prevent the misuse of funds for illegal purposes. CPAs are encouraged to familiarize themselves with the new requirements to ensure compliance and maintain a reputation for honesty and integrity.