February 2018
A fund distribution institution should include operations such as the know-your-customer procedure, sales behavior, short-term trading prevention and money-laundering prevention in the internal control system of the fund distribution institution (Taiwan)
2017.12.27
Oli Wong
The Financial Supervisory Commission (hereinafter, the "FSC") issued the Jin-Guan-Zheng-Tou-Zi1060044066 Directive of December 27, 2017 (hereinafter, the "Directive") to require a fund distribution institution to include operations such as the know-your-customer procedure, sales behavior, short-term trading prevention and money-laundering prevention in the internal control system of the fund distribution institution. In addition, the fund sales behavior and distribution channel remuneration payment principles shall follow the self-regulatory requirements prescribed by the Securities Investment Trust and Consulting Association of the R.O.C. This Directive came into effect on the day of its promulgation.
This Directive points out that under Article 23 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises and Article 42 of the Regulations Governing Offshore Funds, when handling fund distribution operation, a fund distribution institution should fully know and assess the investment knowledge, investment experience, financial status and investment risk tolerance of its customers (i.e., know-your-customer). In addition, operations involving the know-your-customer procedure, sales behavior, short-term trading prevention and money-laundering prevention should be included in the internal control system of the fund distribution institution.
This Directive further points out that the fund sales behavior and the distribution channel payment principles of a fund distribution institution shall follow the self-regulatory requirements prescribed by the Securities Investment Trust and Consulting Association of the R.O.C. (hereinafter, the "SITCA"). In addition, in order to ascertain the compliance and appropriateness of fund distribution business conducted by a fund distribution institution pursuant to the above provisions, the fund distribution institution is required to review the status of fund distribution business handled in the previous year during the first quarter of each year and submit a self-evaluation report to the SITCA by the end of March in the same year, and the SITCA will consolidate such reports for submission to the FSC.
Oli Wong
The Financial Supervisory Commission (hereinafter, the "FSC") issued the Jin-Guan-Zheng-Tou-Zi1060044066 Directive of December 27, 2017 (hereinafter, the "Directive") to require a fund distribution institution to include operations such as the know-your-customer procedure, sales behavior, short-term trading prevention and money-laundering prevention in the internal control system of the fund distribution institution. In addition, the fund sales behavior and distribution channel remuneration payment principles shall follow the self-regulatory requirements prescribed by the Securities Investment Trust and Consulting Association of the R.O.C. This Directive came into effect on the day of its promulgation.
This Directive points out that under Article 23 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises and Article 42 of the Regulations Governing Offshore Funds, when handling fund distribution operation, a fund distribution institution should fully know and assess the investment knowledge, investment experience, financial status and investment risk tolerance of its customers (i.e., know-your-customer). In addition, operations involving the know-your-customer procedure, sales behavior, short-term trading prevention and money-laundering prevention should be included in the internal control system of the fund distribution institution.
This Directive further points out that the fund sales behavior and the distribution channel payment principles of a fund distribution institution shall follow the self-regulatory requirements prescribed by the Securities Investment Trust and Consulting Association of the R.O.C. (hereinafter, the "SITCA"). In addition, in order to ascertain the compliance and appropriateness of fund distribution business conducted by a fund distribution institution pursuant to the above provisions, the fund distribution institution is required to review the status of fund distribution business handled in the previous year during the first quarter of each year and submit a self-evaluation report to the SITCA by the end of March in the same year, and the SITCA will consolidate such reports for submission to the FSC.
