TAIWAN Law and Practice Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
6. Depositor Protection 6.1 Deposit Guarantee Scheme (DGS) DGS Requirements, and Administrator of the DGS The Deposit Insurance Act mainly governs the depositor protection regime in Taiwan. The Central Deposit Insurance Corporation (CDIC) was established on 27 September 1985 and is responsible for the management of the deposit insurance system. The CDIC implements a deposit insurance mechanism pursuant to which the CDIC provides compensation to depositors within the maximum insured amount of NTD3 million, in order to protect the rights and inter - ests of depositors and to maintain financial sta - bility in the event of a financial institution being ordered to cease operations by the FSC. Classes of Deposits Covered by the Depositor Protection Scheme Currently, the following deposits are covered by deposit insurance: • checking accounts; • demand deposits; • time deposits; • deposits required by law to be deposited in certain financial institutions; and • any other deposits approved by the FSC. Limits on the Amount of the Depositor Protection Scheme If an insured institution is ordered to cease its business operations or is unable to pay off its deposits, the CDIC compensates each deposi - tor for up to NTD3 million, including principal and interest. Funding of the Depositor Protection Scheme The share capital of the CDIC is provided by the Ministry of Finance, the CBC and the insured
form prescribed by the IBMOJ, covering the fol - lowing information: • the transaction details (eg, the type, currency and amount of the transaction); • a statement of the reason for suspicion, including who, what, when and where; and • the warning signs of money-laundering activi - ties. If a transaction triggers the red flags (see below), it should be reviewed under the risk-based assessment to decide whether it is a SAR trans - action. If the financial institution holds the view that such red-flagged transaction has nothing to do with any AML and CTF activity based on the relevant facts and its assessment, it is not required to report the transaction to the IBMOJ. However, it must retain records of the determina - tion and assessment of such transaction. The BA has implemented the red flags list for suspicious money-laundering and terrorism- financing transactions, though such items are not exhaustive in their coverage. To identify a red flag transaction concerning potential money laundering/terrorism financing, a bank should select or create suitable red flags based on its: • assets scale; • geographic areas; • business profile; • customer-base profile; • characteristics of transactions; • internal money-laundering/terrorism-financing risk assessment; or • information on daily transactions.
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