The Rules for Anti-money Laundering for Financial Institutions were prescribed to confirm the identity of customers and retention of records in consolidated manners(Taiwan)

Oli Wong

The Financial Supervisory Commission promulgated the Rules for Anti-money Laundering for Financial Institutions (hereinafter, the “Rules”), which consist of 16 articles, via the Jin-Guan-Yin-Fa-10610003100 Directive of June 28, 2017. The Rules came into effect on the day of their promulgation.

Under the first part of Article 7, Paragraph 4 of the Money Laundering Control Law, the central competent authority for specified business shall prescribe rules for authorizing matters such as the confirmation of a customer’s identity, retention of records, enhanced customer review, reporting of currency transactions above a certain monetary threshold and reporting of any transaction suspected to be involved in money laundering or terrorist funding. Therefore, the Rules are formulated to require financial institutions to implement an identity confirmation procedure upon account opening of customers, including the requirement to request the submission of identification supporting documents to identify and verify their identity and to ascertain the purposes and nature of account opening (such as potential transactions via the account) and background information.

The Rules apply to banks, securities and futures operators, insurers, electronic payment institutions, and electronic ticket issuers regulated by the Financial Supervisory Commission. (Article 2 of the Rules)

With respect to the decision on the intensity of enforcement, a financial institution is required to decide on different intensity of enforcement, depending on the level of risk. If assessment suggests higher risks, more information should be obtained from customers and appropriate control measures should be adopted. For customers from countries or regions where money laundering or terrorist funding risks are high, enhanced measures comparable to risks should also be taken. (Article 6, Paragraph 1 of the Rules)

With respect to scope of scrutiny, a financial institution shall scrutinize if a customer is an individual holding an important political position inside or outside this country or in any international organization or a designated sanction target. In addition, the scope of scrutiny should extend to actual beneficiaries and high-ranking executives of juristic person or organization customers. (Article 8, Subparagraph 1 and Article 10, Paragraph 1 of the Rules)

The Rules also specifically stipulate that if a financial institution finds that a customer uses a false name or false account or holds any forged or altered document, refuses to provide identity verification documents, or the information so provided is unclear when verifying the identity of the customer, the business relationship or transaction should be declined politely. (Article 4 of the Rules)