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 Council of Agriculture, Executive Yuan 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 2022 and in 2021:

B. Implementation of Targeted Examinations:

Based on financial supervisory information and the FSC’s supervisory policies, the targeted examinations the FEB has conducted in 2021 and in 2022 are as following:

i. The targeted examinations conducted by the FEB in 2022 were “Financial holding companies’ management of investee companies”, “Security and control of application program interface (API) for domestic banks”, “Digital Services (including My Data) for domestic banks”, “Real estate loan business for domestic banks and credit cooperatives”, “Concurrent operation of insurance broker and insurance agent business for domestic banks”, “Management of exposures in Mainland China, Hong Kong and New Southbound countries for domestic banks”, “Implementation of anti-money laundering (AML), countering the financing of terrorism (CFT), and Counter Proliferation Financing (CPF) measures (including the streamlining of administrative requirement for Know-your-customer (KYC) operations) for domestic banks and credit cooperatives”, “Implementation of internal control and management measures for preventing wealth management specialists from misappropriating client funds and the protection of the rights of elderly customers and the disabled for domestic banks”, “Insurers’ use of funds in special projects”, “Implementation of the compliance system for insurers”, “Land and construction and unsold properties loan business for bills finance companies”, “Brokerage and sales operations businesses (including protection of the interests of the elderly and customers with physical or mental disabilities) for the branches of securities firms”, “Internal management regarding fund transactions and execution (including prevention of conflicts of interest) for securities investment trust companies”, “Information disclosures related to the offering of Environmental, Social, and Governance (ESG) funds for securities investment trust companies”, “Protection of the rights of elderly customers and the disabled for credit cooperatives and insurers”, “Business operations (including operations of card issuing, acquiring, internal management, and anti-money laundering) and IT operations for the institutions engaging in credit card business”, “Business management (including operations of anti-money laundering) and IT operations for the specialized electronic payment institution”, “Postal savings and remittances businesses of Chunghwa Post Co., Ltd.”, and etc.

ii. The targeted examinations conducted by the FEB during the first half of 2021 were “Operations of anti-money laundering, counter-terrorism financing and non-proliferation for foreign bank branches in Taiwan, credit cooperatives and insurance companies”, “Financial consumer protection (including elderly customers) for domestic banks, credit cooperatives, insurance companies and securities firms”, “Operating strategies and risk management for financing holding groups”, Mortgage loan and construction loan for domestic banks”, “Implementation of the risk-based auditing systems for domestic banks”, “The AML for tax crimes and tax evasion for domestic banks, “Digital finance services risk management for domestic banks”, “Land and construction and unsold properties loan business for bills finance companies”, “Risk management mechanisms for non-guaranteed commercial paper for bills finance companies”, “Corporate governance for insurance companies”, “Personal information protection for insurance companies”, “Investment insurance products for life insurance companies”, “Management mechanisms of orders taking from corporate client for the securities firms”, “IT operations for securities firms”, “Monitoring mechanism of suspicions money laundering activities or transactions for securities firms”, “Review of the implementation of the correction plan for lapses identified at the discretionary business targeted examinations for securities investment trust companies”, “Business management (including operations of anti-money laundering) and IT operations for the electronic payment institutions, electronic stored value card issuers and institutions engaging in credit card business”, “Customer due diligence and monitoring operations of watch-listed account of electronic payment businesses for specialized and concurrent electronic payment institutions”, and etc.

C. Commissioned examinations:

According to Paragraph 1 of Article 7 of the “Agricultural Finance Act”, the FEB is commissioned by the Council of Agriculture, Executive Yuan, to conduct examinations at agricultural financial institutions and information centers. In total, the FEB completed 114 examinations in 2022 and 109 examinations in 2021.