Legal basis:

The Financial Examination Bureau (FEB) is empowered under Paragraph 1 of Article 2 and Article 4 & 5 of the “Organic Act of the Financial Supervisory Commission (FSC)” and other applicable financial laws to conduct financial examinations of financial institutions within the FSC’s jurisdiction. In addition, according to Paragraph 1 of Article 7 of the “Agricultural Finance Act”, the FEB is commissioned by the Ministry of Agriculture to conduct examinations of agricultural financial institutions.

Types of financial examinations:

Financial examinations consist of full-scope examinations, targeted examinations, and commissioned examinations.

The frequency and implementation of examinations:

A. Implementation of Full-scope Examinations:

i. The FEB will examine head offices of financial institutions, in principle, once in every 2-year period. The examination frequency for these institutions also depends on the assessment results of the differential financial examination mechanism.

ii. Implementation of full-scope examinations in 2024 and in 2023:

B. Implementation of Targeted Examinations:

Based on financial supervisory information and the FSC’s supervisory policies, the targeted examinations the FEB has conducted in 2023 and in 2024 are as following:

i. The targeted examinations conducted by the FEB in 2024 were “Oversees and management of subsidiaries for FHCs”, “Internal management (including Oversees of investee companies) for domestic banks”, “Liquidity risk management mechanism for domestic banks”, “Risk control mechanism of fraud prevention for domestic banks”, “The management mechanism of wealth management specialists and financial customer protection for domestic banks”, “Credit extension business (including real estate loan business) for domestic banks and bills finance companies”, “Information security of exo-service-system for insurance companies”, “Equity investment and risk management for insurance companies”, “Business of insurance broker companies and insurance agent companies (including Procedures of anti-money laundering, counter-terrorism financing, and non-proliferation of weapons)”, “Financial customer protection for insurance companies and securities companies”, “Management of information and communication security for securities companies ”, “Management of outsourcing processes for securities firms”, “Securities firms branches”, “Investment risk management and information disclosure for ETFs by securities investment trust companies”, “Real estate loan business and the rights and interests protection for disable and elderly customers of credit cooperatives”, “Business operations (including operations of acquiring, internal management, and anti-money laundering) and IT operations for the institutions engaging in credit card business and specialized electronic payment institutions”, “Operation of anti-money laundering, counter-terrorism financing, and non-proliferation of weapons regulations in each sector of financial industry [including virtual asset service providers (VASPs)]”, “Postal savings, remittances businesses, and internal management of Chunghwa Post Co., Ltd.” and etc.

ii. The targeted examinations conducted by the FEB in 2023 were “Financial holding companies’ management of investee companies”, “Personal information protection measures of credit card consumers for domestic banks”, “Overseas exposures management mechanism for domestic banks”, “Reviews of risk management mechanism of fraud prevention for domestic banks”, “Implementing transition plans in response to the end of LIBOR for domestic banks”, “Business operations of structured products and financial derivatives (including FX SWAP) for domestic banks”, “Security management for domestic banks’ open system”, “Fair treatment of elderly customers, rights and interests protection for persons with disabilities, personal information protection measures and financial customer protection for banks and insurance companies”, “Foreign securities investment for insurance companies”, “Information security of exo-service-system for insurance companies”, “Operation of insurance product management for insurance companies”, “Auto insurance agent”, “Real estate lending business for bill finance companies”, “Procedures of anti-money laundering, counter-terrorism financing, and non-proliferation of weapons for securities firms”, “Targeted examinations on the operating of consumer protections for the branches of securities firms”, “Information disclosures related to the offering of Environmental, Social, and Governance (ESG) funds for securities investment trust companies”, “Legal compliance and internal audits for credit cooperative”, “Internal management mechanisms for the branches of credit cooperative”, “Business operations (including operations of acquiring, internal management, and anti-money laundering) and IT operations for the institutions engaging in credit card business and specialized electronic payment institutions”, “Operations of anti-money laundering, counter-terrorism financing, and non-proliferation of weapons for virtual asset service providers (VASPs)” , and etc.

C. Commissioned examinations:

According to Paragraph 1 of Article 7 of the “Agricultural Finance Act”, the FEB is commissioned by the Ministry of Agriculture to conduct examinations at agricultural financial institutions. In total, the FEB completed 115 examinations in 2024 and 131 examinations in 2023.