TAIWAN Law and Practice Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
carried out to clarify that such profits are not due to advantages such as the lower capital cost of the banking industry. The remuneration system should not incentivise directors, managers and employees to engage in acts that exceed the risk appetite of the banking industry in order to pursue remuneration. Last but not least, the remuneration system and per - formance should be reviewed regularly. Regulators’ Supervisory Approach A bank is required to disclose the remunera - tion of directors, supervisors, general manag - ers, vice-general managers, chairpersons of the board and general managers rehired as consult - ants by disclosing the aggregate remuneration information (with the name(s) indicated for each remuneration bracket), or to disclose the name of each individual and the corresponding remu - neration amount (as applicable) in its annual report. Consequences of Breaching the Requirements A bank that fails to comply with the disclosure requirement for the annual report should be subject to an administrative fine of between NTD500,000 and NTD10 million.
• the Regulations Governing Anti-Money Laun - dering of Financial Institutions; and • the Regulations Governing Internal Audit and Internal Control System of Anti-Money Laundering and Countering Terrorism Financ - ing of Banking Business and Other Financial Institutions. Know-Your-Customer (KYC) Requirements Firstly, a bank should conduct due diligence on both new and existing customers, taking a risk-based approach. The bank should properly identify and verify the identity of the customer as well as its beneficial owner, and should keep records on all relevant information. In particular, when the customer is a juristic person, the bank should understand the business nature, equity structure and controlling person of the customer. Under a higher-risk circumstance, the bank should conduct enhanced customer due dili - gence. For ongoing customer due diligence, the bank should regularly update all information at least once a year to ensure that the business relationship with the customer is consistent with the bank’s risk profile. The bank should also understand the customer’s source of funds when necessary. In addition, the bank should verify the identity of the customer and keep relevant records of large cash transactions, as well as report such trans - actions to the IBMOJ, with certain exceptions for government departments and fund arrange -
5. AML/KYC 5.1 AML and CFT Requirements Principal Laws and Regulations
ments between financial institutions. Suspicious Activity and Transaction Reporting
In Taiwan, the primary regulators for anti-mon - ey laundering (AML) and countering terrorism financing (CTF) are the Investigation Bureau under the Ministry of Justice (IBMOJ) and the FSC. The FSC has promulgated specific regu - lations governing AML and CFT in the banking sector, including:
The bank should report all suspicious transac - tions to the IBMOJ, including attempted trans - actions. When reporting to the IBMOJ, the bank should use the Suspicious Activity Report (SAR)
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