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Implementation of Financial Examinations

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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 2021 and in 2020:
Units: number of financial institutions
Types of financial institutions 2021 2020
Financial holding companies 7 7
Domestic banks * 37 44
Foreign bank branches in Taiwan 8 13
Credit cooperatives 12 10
Bills finance companies 3 4
Life insurance companies 9 10
Non-life insurance companies 13 6
Securities firms, securities investment trust companies and securities finance companies 23 26
Note: The statistics include full-scope examinations for head offices, domestic and foreign branches of the institutions.
B. Implementation of Targeted Examinations:

Based on financial supervisory information and the FSC’s supervisory policies, the targeted examinations the FEB has conducted in 2020 and in 2021 are as following:

i. 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.
ii. The targeted examinations conducted by the FEB in 2020 were “Operations of anti-money laundering, counter-terrorism financing and non-proliferation for various types of financial institutions”, “Internal control of trading room for domestic banks, insurance companies, and securities investment trust companies”, “Implementation of principles for fair treatment of consumers and financial customer protection measures for domestic banks and insurance companies”, “Electronic payment business and securities business concurrently operated by domestic banks”, “Liquidity risk management of the domestic banks”, “Digital financial services for domestic banks”, “Corporate loans for domestic banks”, “Security maintenance, monitoring and emergency response of host system for domestic banks”, “Internal management of financial advisor for domestic banks”, “Security design of e-banking transactions for domestic banks”, “Corporate governance for Credit cooperatives”, “Electronic commerce systems for insurance companies”, “Operations of risk management for life insurance companies”, “Establishment of information system and IT operations for life insurance companies”, “Wealth management business for securities firms” “Futures brokerage business for the futures commission merchant”, “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”, 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 109 examinations in 2021 and 138 examinations in 2020.

Visitor: 6641   Update: 2022-01-18
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