Financial Crime World

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Financial Inclusion and Compliance: A Key Driver of Taiwan’s Economic Success

Taiwan has consistently demonstrated its ability to adapt to changing global circumstances, making it one of the most competitive economies in the world. Its strong financial system, recognized by international organizations such as the World Economic Forum and the International Institute for Management Development, is a key driver of its economic success.

The Banking Sector in Taiwan

According to the Financial Supervisory Commission (FSC), there are currently 39 domestic banks and 28 local branches of foreign banks operating in the country. The top five domestic banks measured by equities and assets are:

  • Bank of Taiwan
  • CTBC Bank Co, Ltd
  • Mega International Commercial Bank
  • Cathay United Bank
  • Taipei Fubon Commercial Bank Co, Ltd

Regulatory Measures

To ensure financial stability and prevent systemic risk, the FSC has implemented a number of measures to regulate the banking sector. These include:

  • Higher capital standards for domestic systemically important banks, such as CTBC Bank Co, Ltd, Cathay United Bank, Taipei Fubon Bank, Mega International Commercial Bank, Taiwan Cooperative Bank, and First Commercial Bank
  • Approvals granted to new players in the market, including LINE, Next Bank, and Rakuten Bank, which will provide greater competition and innovation in the sector

Regulatory Regime

The regulatory regime applicable to banks is governed by a number of laws and regulations, including:

  • Banking Act of Taiwan
  • Financial Holding Company Act of Taiwan
  • Offshore Banking Act

Operating a Bank in Taiwan

In order to operate a bank in Taiwan, an approval and licence from the FSC are required, as well as a minimum capital requirement of NT$10 billion. The establishment, cancellation or relocation of any branch office, representative office, subsidiary or joint venture by a bank also requires the FSC’s approval.

Overseas Banks Operating in Taiwan

Overseas banks operating in Taiwan must obtain the FSC’s approval to set up and operate a branch office, and are subject to strict regulations regarding their activities. The FSC has also issued guidelines on offshore transactions, which prohibit overseas banks from conducting business in Taiwan unless it is carried out on an offshore transaction basis.

Conclusion

Taiwan’s strong financial system and robust regulatory regime are key drivers of its economic success. The country’s ability to adapt to changing global circumstances and promote financial inclusion and innovation has made it an attractive destination for foreign investment and a hub for international trade. As Taiwan continues to evolve and grow, its financial sector is likely to play an increasingly important role in supporting the country’s economic development.