The Financial Supervisory Commission (hereinafter, the “FSC”) promulgated the Administrative Rules for Offshore Banking Units (hereinafter, the “Rules”) as amended, which consist of 13 articles, via the Jin-Guan-Yin-Wai-10650001370 Directive of May 22, 2017. Except for Paragraph 1 of Article 10, Article 11 and Article 12, which will go into effect six months after the promulgation date, the rest of the revision came into effect on the day of its promulgation. This revision is focused on strengthening the customer identity confirmation procedures of offshore banking units (i.e., “OBUs”).
Article 10 of the Rules as amended specifically stipulates that an OBU shall implement its customer identity confirmation procedures pursuant to the Money Laundering Control Act and the Information Terrorism Control Law of Taiwan and to relevant requirements formulated by bankers’ associations with respect to prevention of money laundering and information terrorism and shall include such procedures in its internal control and internal audit items. In addition, OBUs are required to re-initiate their customer identity confirmation procedures and review the customers’ risk level by the end of this year.
Article 11 of the Rules as amended specifically stipulates that an OBU may confirm the identity of customers with the assistance of intermediaries, provided that relevant requirements shall be complied, and the implementation scheme and a list of the intermediaries shall be submitted to the FSC for reference. However, intermediaries are limited to banking institutions and it is specifically stipulated that the scope of intermediaries includes overseas branches or subsidiary banks of domestic banks, the head office of a foreign bank’s branches in Taiwan or branches of such head offices, or the parent banks of a foreign bank’s subsidiary banks in Taiwan or branches of such parent banks.
In addition, Article 12 of the Rules as amended provides that when handling new account opening, an OBU shall enhance its understanding of such transaction purposes of the account opening as well as the purposes and expected transactions of the account and shall not solicit or assist domestic customers to open accounts as non-residents. In addition, when offshore juristic person shareholders or directors or actual beneficiaries are domestic natural persons or juristic persons, a statement indicating that the switch to non-resident capacity is not made as a result of solicitation or for the purpose of investing in specific products should be obtained from each customer, and an OBU is required to set up relevant internal control systems for the above-mentioned account opening.
Since this revision pertains to corresponding adjustments of international operating procedures and system configuration required of banks, a six-month grace period is granted to facilitate proper adjustments concerning the strengthened customer identity confirmation procedures of OBUs under the above-mentioned Paragraph 1 of Article 10, Article 11 and Article 12, which will not go into effect until six months later.