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Implementation of Financial Examinations

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Legal basis:

According to Paragraph 1 of Article 2 and Article 4 &5 of the “Organic Act of the Financial Supervisory Commission (FSC)” and other applicable financial regulations, the Financial Examination Bureau (FEB) conducts financial examinations at financial institutions within the FSC’s jurisdiction. In addition, according to Paragraph 1 of Article 7 of the “Agricultural Finance Act”, the FEB conducts examinations at agricultural financial institutions empowered by the Council of Agriculture, Executive Yuan.

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 conducts examinations for head offices of financial institutions, in principle, once during each 2-year period. The examination frequency for these institutions also depends on the results assessed by the differential financial examination mechanism.
ii. Implementation of full-scope examinations in 2020 and in 2019:
Units: number of financial institutions
Types of financial institutions 2020 2019
Financial holding companies 7 7
Domestic banks * 44 50
Foreign bank branches in Taiwan 13 9
Credit cooperatives 10 12
Bills finance companies 4 5
Life insurance companies 10 11
Non-life insurance companies 6 13
Securities firms, securities investment trust companies and securities finance companies 26 19*
*: The statistics include full-scope examinations conducted at head offices, domestic and foreign branches of the institutions.
B. Implementation of Targeted Examinations:

Referring to financial supervisory information and in response to financial supervisory policies, the FEB conducted targeted examinations during the past year as follows:

i. 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 Unions”, “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.
ii.The targeted examinations conducted by the FEB in 2019 were “operations of anti-money laundering, counter-terrorism financing and non-proliferation for various types of financial institutions”, “the FHCs’ management mechanisms of interested-party transactions”, “electronic payment business for domestic banks”, “credit card and cash card business for domestic banks”, “digital financial services and information security of the IoT appliance of domestic banks”, “internal control of domestic banks’ trading rooms”, “domestic banks’ security maintenance, monitoring and emergency response of host system”, “security control of information system and internal management (including the operations of anti-money laundering) for Chunghwa Post Co., Ltd.”, “internal management for the cross-district branches or the branches in remote areas of Credit Unions”, “business management and IT operations for the electronic payment institutions”, “securities investment business for insurance companies”, “operations for preventing conflicts of interest with regard to equity trader for life insurance companies”, “the implementation of IFRS 9 for life insurance companies”, “broker business of insurance brokerage firms, insurance agent companies and reinsurance companies”, “broker business of securities firms’ branches”, “sub-brokerage business for securities firms”, “Robo-Advisor business for securities investment trust companies and securities investment consulting companies”, “discretionary investment business and the business of master agents of offshore funds for securities investment trust companies”, and etc.
C. Commissioned examinations:

According to Paragraph 1 of Article 7 of the “Agricultural Finance Act”, the FEB conducts examinations at agricultural financial institutions and information centers empowered by the Council of Agriculture, Executive Yuan. In total, the FEB completed 138 examinations in 2020 and 137 examinations in 2019.

Visitor: 6304   Update: 2021-01-20
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