Two-Thirds of Banking Board Directors Under Scrutiny, Report Required

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Background

The Financial Supervisory Commission (FSC) has ordered the Bankers Association of Taiwan (BA) to submit discipline rules regarding internal control and audit systems for banks. Failure to comply may result in administrative fines ranging from NTD2 million to NTD50 million.

Concerns about Director Experience

Two-thirds of a bank’s board of directors are found to be lacking in experience, leading to concerns about the effectiveness of internal control and audit systems.

Requirements for Directors and Senior Managers

Designation and Qualifications

Chairperson and Director Requirements

• The chairperson may not concurrently act as general manager or hold positions in other financial institutions unless approved by the FSC.
• Directors must meet certain qualifications, such as having at least five years of experience in banking or finance.

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

Regulations and Requirements

Due Diligence on Customers

• Banks are required to conduct due diligence on new and existing customers.
• Identify and verify customer identity.
• Keep records of all relevant information.

Enhanced Customer Due Diligence for Higher-Risk Customers

• Additional measures must be taken for higher-risk customers, such as enhanced due diligence and monitoring.

Reporting Suspicious Transactions

• Suspicious transactions must be reported to the IBMOJ using a standardized form.

Consequences of Non-Compliance

Failure to comply with disclosure requirements may result in administrative fines ranging from NTD500,000 to NTD10 million. The FSC has warned that non-compliance will not be tolerated and that banks must take immediate action to rectify the situation.

Conclusion

The move is seen as a major crackdown on banking practices and a bid to improve transparency and accountability in the sector.