Financial Crime World

Here is the rewritten article in markdown format:

Taiwan’s Banking Regulatory Framework

==============================

Taiwan’s banking regulatory framework is designed to ensure the stability and soundness of the banking system while protecting customers’ interests. The framework encompasses various regulations, including liquidity coverage ratio (LCR), leverage ratio, total loss-absorbing capacity (TLAC), domestic systemically important banks (D-SIBs), customer protection measures, and alternative dispute resolution mechanisms.

Regulatory Framework

Liquidity Coverage Ratio (LCR)

Implemented in 2015

The LCR is a regulatory requirement that aims to enhance the short-term liquidity recovery ability of banks. Banks must maintain an LCR of at least 100% to ensure they have sufficient liquidity to meet their obligations during times of stress.

  • Key Features:
    • Implemented in 2015
    • LCR threshold: 100%
    • Aimed at enhancing short-term liquidity recovery ability

Leverage Ratio

Introduced in 2013

The leverage ratio is a regulatory requirement that addresses the limitations of the Bank Capital Adequacy Ratio and prevents excessive leverage. This regulation aims to ensure that banks maintain a stable level of capital relative to their assets.

  • Key Features:
    • Introduced in 2013
    • Aims to prevent excessive leverage
    • Ensures stability of bank’s capital structure

Total Loss-Absorbing Capacity (TLAC)

Regulators Aim to Implement New Rules from 2024

The TLAC regulation aims to enhance the quality and risk-taking capacity of banks by implementing new rules from 2024. This regulation will ensure that banks maintain a higher level of loss-absorbing capacity, making them more resilient in times of stress.

  • Key Features:
    • Aimed at enhancing capital quality and risk-taking capacity
    • New rules to be implemented from 2024

Domestic Systemically Important Banks (D-SIBs)

Six Banks Designated as D-SIBs, Subject to Stricter Capital Standards

The six designated banks are subject to stricter capital standards due to their systemic importance. This regulation aims to ensure that these banks maintain a higher level of capital and liquidity to mitigate potential risks.

  • Key Features:
    • Six banks designated as D-SIBs
    • Subject to stricter capital standards
    • Aimed at mitigating potential risks

Customer Protection

Know-Your-Customer (KYC) Processes

Banks must conduct thorough KYC processes and assess the suitability of financial products for customers. This ensures that banks provide suitable financial solutions to their customers.

  • Key Features:
    • Thorough KYC processes required
    • Assess suitability of financial products for customers

Product Information Disclosure

Banks must provide comprehensive product information, including risks and scenario analysis. This ensures that customers are fully informed about the financial products they purchase.

  • Key Features:
    • Comprehensive product information disclosure required
    • Includes risks and scenario analysis

Financial Ombudsman Institution (FOI)

The FOI is established to address customer complaints and provide alternative dispute resolution mechanisms. This ensures that customers have a platform to resolve disputes with banks.

  • Key Features:
    • Established to address customer complaints
    • Provides alternative dispute resolution mechanisms

Rules Governing Banks’ Relationships with Customers and Other Third Parties

Commercial Banks

Commercial banks engage in various financial activities, including deposit-taking, credit services, securities investments, and foreign remittances. These activities are subject to specific regulations to ensure stability and soundness of the banking system.

  • Key Features:
    • Engage in various financial activities
    • Subject to specific regulations

Trust and Investment Companies

Trust and investment companies may engage in proprietary trading activities, trust enterprise business, insurance agent or broker business, financial advisory services, electronic payment business, and other approved activities. These activities are subject to specific regulations to ensure stability and soundness of the banking system.

  • Key Features:
    • May engage in various financial activities
    • Subject to specific regulations

Overall, Taiwan’s regulatory framework aims to ensure stability and soundness of the banking system while protecting customers’ interests through enhanced transparency, disclosure, and dispute resolution mechanisms.