The Financial Supervisory Commission promulgated the Regulations Governing Innovative Financial Technology Experiments to Prevent Money Laundering and Combat Terrorist Financing (hereinafter, the “Regulations”) via the Jin-Guan-Ke-10801082660 Directive of May 15, 2019 and the Ministry of Justice’s Fa-Jian-10804515840 Directive. Consisting of 15 articles, the Regulations came into effect on the day of their promulgation. The Regulations are highlighted below.
First, Article 1 of the Regulations specifically provides that the Regulations shall not apply to innovative experiments conducted by financial institutions, and that an applicant shall comply with the Regulations and the approved innovative experiment in implementing the prevention of money laundering and the suppression of terrorist financing.
In addition, Articles 3 through 6 of the Regulations specifically provide for the measures to confirm the identity of the participants and the mechanisms to conduct continuous review by an applicant and the circumstances where business relations or transactions with the participants shall be rejected and stipulate that the intensity of implementation shall be decided based on a risk-based approach.
Third, implementation measures relating to the prevention of money laundering and suppression of terrorist financing are specifically stipulated. Articles 7 and 8 of the Regulations specifically stipulate the policies and procedures that shall be followed by applicants for cross-border remittance business and the information about the remitters and the beneficiaries shall be prepared and retained. Articles 9 and 10 of the Regulations clearly provided that an applicant shall formulate a procedure for verifying the names of the trading counterparties and policies concerning transaction monitoring. Article 11 of the Regulations specifically provides that an applicant shall retain records of dealings and transactions with the participants as well as the scope, manners and duration of the retention.
Fourth, Articles 12 and 13 of the Regulations specifically provide that an applicant shall set up internal control and audit systems to prevent money laundering, and that the competent authority may send personnel or retain appropriate agencies (institutions) at all times to conduct an audit.
Fifth, Article 14 of the Regulations specifically stipulate that with respect to the scope, manners and procedure for reporting suspicious money laundering or terrorist financing transactions, including the requirement that the monitoring types or other irregular circumstances that meet the requirement of Article 10, a review on whether they are suspected money laundering or terrorist financing transactions shall be completed as soon as possible with records retained. Suspicious money laundering or terrorist financing transactions as reviewed, regardless of the transaction amounts, shall be reported based on a report format set by the Bureau of Investigation, and the report shall be submitted to the Bureau of Investigation immediately after it is approved by the personnel in charge and shall be submitted within two business days after the approval is made. This shall also apply if such transactions are not completed. In addition, reporting on obviously material and emergency cases involving suspicious money laundering or terrorist financing shall be made to the Bureau of Investigation as soon as possible by fax or by any other feasible means. However, if the Bureau of Investigation confirms receipt of the submission via a faxed confirmation receipt, there is no need to supplement a report. The faxed confirmation receipt shall also be retained. In addition, submissions to the Bureau of Investigation and relevant records and receipts shall be retained in accordance with Article 11.