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 2023 and in 2022:

B. Implementation of Targeted Examinations:

Based on financial supervisory information and the FSC’s supervisory policies, the targeted examinations the FEB has conducted in 2022and in 2023 are as following:

i. 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.

ii. 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.

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 131 examinations in 2023 and 114 examinations in 2022.