Banking Regulations in Taiwan: A Comprehensive Guide
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Introduction
Taiwan’s banking regulations are governed by various laws and institutions. Understanding these regulations is crucial for banks operating in the country to ensure compliance and avoid potential penalties.
Regulatory Framework
The Financial Supervisory Commission (FSC) is the primary regulator for banks, while the Investigation Bureau under the Ministry of Justice (IBMOJ) handles anti-money laundering (AML) and combating financing of terrorism (CFT).
Remuneration Disclosure Requirements
Banks in Taiwan must disclose remuneration information for their directors and supervisors. The disclosure includes:
- Aggregate remuneration information, with the name(s) indicated for each remuneration bracket
- To disclose the name of each individual and the corresponding remuneration amount
Consequences of Non-Compliance
A bank that fails to comply with the remuneration disclosure requirement may face an administrative fine of between NTD500,000 and NTD10 million.
Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT)
The IBMOJ and FSC regulate AML/CFT in Taiwan. Banks must conduct due diligence on new and existing customers using a risk-based approach, which includes:
- Identifying and verifying the customer’s identity and beneficial owner
- Keeping records of relevant information
Suspicious Activity Reporting (SAR)
Banks must report suspicious transactions to the IBMOJ, including attempted transactions. The SAR form prescribed by the IBMOJ covers:
- Transaction details
- A statement of reason for suspicion
- Warning signs of money laundering activities
Red Flags
The FSC has implemented a red flags list for suspicious money laundering and terrorism financing transactions. Banks should select or create suitable red flags based on their assets scale, geographic areas, business profile, customer-base profile, characteristics of transactions, and internal AML/terrorism financing risk assessment.
Depositor Protection Regime
The Deposit Insurance Act governs the depositor protection regime in Taiwan. The Central Deposit Insurance Corporation (CDIC) manages the deposit insurance system and compensates each depositor up to NTD3 million if an insured institution is ordered to cease business operations or unable to pay off deposits.
Bank Secrecy Requirements
Banks in Taiwan are required to keep information regarding customers and relevant transactions confidential. The Banking Act governs bank secrecy requirements, which include:
- Maintaining confidentiality of customer information and transactions