Financial Crime World

Foreign Banks in Taiwan Must Meet Strict Criteria to Operate Wealth Management Services

New Regulations Aim to Ensure Financial Stability, Transparency, and Accountability

The Financial Supervisory Commission (FSC) of Taiwan has issued new regulations requiring foreign banks with branches in Taiwan to meet strict criteria before they can operate wealth management services in the country. The regulations aim to ensure that these banks have sufficient financial resources, effective internal controls, and a strong risk management culture.

Criteria for Foreign Banks

To be eligible to operate wealth management services in Taiwan, foreign banks must demonstrate:

  • A minimum total net worth of NT$150 billion (approximately US$5 billion)
  • Assets under management in Taiwan exceeding NT$300 billion (approximately US$10 billion)
  • A non-performing loan ratio below 1%
  • A loan loss coverage ratio above 100%

Additionally, foreign banks must provide evidence of:

  • Effective internal controls
  • Risk management systems
  • Compliance with financial laws and regulations

Incentives for Increased Investment

To encourage foreign banks to increase their investments and assets under management in Taiwan, the FSC has introduced a new criterion. Foreign banks that can demonstrate an investment plan and specific promises to:

  • Increase their investments in Taiwan over the next three years
  • Increase their assets under management in Taiwan over the next three years
  • Hire more employees in Taiwan over the next three years

will be eligible for approval.

Emphasis on Compliance and Risk Management

The regulations also emphasize the importance of compliance with financial laws and regulations, as well as effective risk management systems. Banks must demonstrate a strong track record of:

  • Compliance with financial laws and regulations
  • Effective risk management practices
  • Adequate internal controls and procedures for protecting customer interests

Reporting Requirements

Foreign banks that are approved to operate wealth management services in Taiwan will be required to submit regular reports to the FSC on their business operations, internal controls, and risk management practices.

Effectiveness Date

The new regulations came into effect on [date] and apply to all foreign banks with branches in Taiwan that wish to operate wealth management services.