Taiwan Financial Institutions Face Compliance Challenges in CRS Due Diligence and Reporting

Introduction

A recent report by Taiwan’s Ministry of Finance has highlighted ongoing deficiencies in the country’s financial institutions’ adherence to Common Reporting Standard (CRS) requirements. The report, issued in May 2024, revealed that many Taiwanese financial institutions are still grappling with compliance issues related to CRS due diligence and reporting.

Key Deficiencies Identified

The findings of the report identified several key deficiencies in the compliance procedures of Taiwanese financial institutions. These included:

Internal Management Gaps

• Many financial institutions failed to establish comprehensive internal procedures specific to CRS, relying instead on existing anti-money laundering or FATCA procedures.
• Some institutions’ procedures lacked crucial elements, such as handling “excluded accounts” or retaining records for the required period.

Due Diligence Shortcomings

• Self-certification forms that were only available in Chinese or English, causing customers to not accurately understand the contents of the form.
• Institutions failing to verify the accuracy of customer self-certifications, particularly with regards to tax identification numbers (TINs) and passive Non-Financial Entities (NFEs).
• Incorrect account identification, due to inadequate processes or misunderstandings of the criteria.

Reporting Errors

• Institutions struggled with producing reporting files in the required XML format, leading to errors and omissions.
• Some institutions failed to submit reports by the required deadlines, risking penalties and non-compliance.

Consequences of Non-Compliance

These deficiencies can lead to significant consequences for financial institutions, including:

• Financial penalties
• Reputational damage
• Increased scrutiny from regulatory bodies

Best Practice Solutions and How Technology Can Help

Technology provides sophisticated solutions that streamline and enhance CRS compliance processes for financial institutions. By leveraging cutting-edge technology, FIs can address the critical deficiencies identified in the recent report, such as:

• Automated due diligence processes, including enhanced self-certification verification and real-time data validation.
• Comprehensive reporting solutions, including accurate data formatting and timely reporting.
• Robust internal controls, including integrated review mechanisms and audit trails.

User-Friendly Interface

A streamlined and intuitive interface can simplify the due diligence and reporting processes, making it easier for staff to navigate and complete tasks accurately. Additionally, comprehensive training and support of FI staff will ensure understanding of CRS regulations and how systems can support each other.

How TAINA Can Help

TAINA Technology offers a robust solution that automates and streamlines due diligence processes, ensuring compliance, accuracy, and efficiency. By adopting TAINA’s innovative solutions, Taiwanese financial institutions can enhance their compliance procedures and mitigate risks.

“We would love to talk to you more about your current documentation validation process and how our award-winning FATCA and CRS Validation platform may add value to your organisation,” said a spokesperson for TAINA Technology. “For more information on how our fully automated FATCA and CRS Validation platform can add value to your business, get in touch or request a demo to see it in action.”