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Banking Industry in Taiwan: A Focus on Remuneration, Anti-Money Laundering, Depositor Protection, and Bank Secrecy

Taiwan’s banking industry is subject to a range of regulations aimed at ensuring transparency, stability, and security. In this article, we will examine the key requirements related to remuneration, anti-money laundering (AML), depositor protection, and bank secrecy.

Remuneration

According to Taiwan’s Financial Supervisory Commission (FSC), banks are required to disclose the remuneration of:

  • Directors
  • Supervisors
  • General managers
  • Vice general managers
  • Chairpersons of the board
  • General managers who are rehired as consultants

This information must be included in the annual report, with aggregate remuneration data provided for each remuneration bracket or individual amounts listed by name.

Failure to comply with these disclosure requirements can result in an administrative fine of between NT$500,000 and NT$10 million.

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

The FSC has promulgated regulations governing AML and CFT in the banking sector. Banks must:

  • Conduct due diligence on both new and existing customers
  • Take a risk-based approach to identify and verify their identity and beneficial ownership

Under higher-risk circumstances, enhanced customer due diligence is required, including regular updates of customer information to ensure consistency with the bank’s risk profile.

Banks must also report suspicious transactions to the Investigation Bureau under the Ministry of Justice (IBMOJ), using a standardized Suspicious Activity Report form.

Depositor Protection

The Deposit Insurance Act governs Taiwan’s depositor protection regime, which is managed by the Central Deposit Insurance Corporation (CDIC). The following deposits are covered:

  • Checking accounts
  • Demand deposits
  • Time deposits
  • Other approved deposits

If an insured institution ceases operations or is unable to pay off deposits, CDIC compensates each depositor up to NT$3 million, including principal and interest. The funding for the depositor protection scheme comes from the share capital of CDIC, which is subscribed by:

  • Ministry of Finance
  • CBC
  • Insured financial institutions

Bank Secrecy

The Banking Act requires banks in Taiwan to keep customer information and relevant transaction records confidential. This includes:

  • Deposit data
  • Loan data
  • Remittance data

Conclusion

Taiwan’s banking industry is subject to a range of regulations aimed at ensuring transparency, stability, and security. These requirements include disclosure of remuneration, AML and CFT measures, depositor protection, and bank secrecy.

As the banking industry continues to evolve, it is essential that these regulations are reviewed regularly to ensure they remain effective in promoting a safe and stable financial system.