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Amendments to the Banking Act

Odin Hsu/Pauline Cheng


To strengthen legal compliance in the banking industry, enforce non-competition requirements imposed upon the responsible persons, enhance international cooperation on anti-money laundering and combating financial terrorism and increase effectiveness in financial supervisory and the competitiveness of the financial market, the Executive Yuan on November 21 passed the draft amendments to the current Banking Act proposed by the Financial Supervisory Commission (the FSC), to be submitted to the Legislative Yuan for further review. The main points of the amendments include:
 
1.      Paragraph 1 of Article 35-2 of the Banking Act is amended to enforce the responsible persons' compliance withthe statutory non-competition requirement. Under the amended Article, the competent authority is authorized to promulgate regulations to prohibit responsible persons of banks from being involved in acts that contain conflicts of interest. To enforce non-competition requirements, the FSC announced on June 6, 2018 (Jin-Guan-In-Fa-10702722440) the draft amendments to the "Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks" and "Regulations Governing Qualification Requirements for the Promoters or Responsible Persons of Financial Holding Companies and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of a Financial Holding Company". The amended regulations apply not only the director or supervisors themselves but also their related parties.
In addition to the above, Paragraph 2 of Article 35-2 is amended to set out the legal consequences of the responsible person's failure to follow the qualification requirements, non-compliance with the concurrent serving restrictions and prohibition of conflicts of interests, e.g. the competent authority should dismiss the responsible person unqualified under the conditions set forth in the regulations. In addition, the competent authority may order any person violating the regulations regarding concurrent serving restrictions and prohibition of conflicts of interests to adjust and eliminate noncompliance. In the case that such person fails to comply within a designated period of time without justification, such person should be dismissed.
 
2.      To enhance international cooperation on anti-money laundering, Article 51-2 is newly added to the Banking Act. Under said Article, the government may execute cooperation treaties, protocols or agreements with foreign governments, institutions or international organizations. Based on the principle of reciprocity, the relevant agencies and facilities may be required to provide necessary information to foreign governments, institutions or international organizations.
 
3.      To increase efficiency in financial supervisory and validly correct banks' violations of regulations, the sanctions that the competent authorities may impose is amended. Additional sanctions under the amended Article 61-1 of the Banking Act include:
 
1)     To restrict on investment;
 
2)     To order or prohibit the disposal or transfer of specific assets;
 
3)     To order to close branches or eliminate departments within a designated period of time;
 
4)     To order the bank to cease its managerial personnel or staff to perform their duties within a designated period of time;
 
5)     To order to set aside a certain amount of funds as reserves; and
 
6)     To do any other necessary acts related to business or operations.
 
4.      In order to deter illegal acts, the Banking Act is amended to heighten penalties.  On the other hand, to alleviate the impact, the newly added Article 133-1 provides that the competent authority may waive punishment for any violation,which is trivial. The competent authority may further adopt appropriate corrective measures.
 
5.      In order to strengthen the supervision of credit card business, Articles 131 and 136-3 of the Banking Act are amended to include penalties for the violations of the regulations governing the credit card business. The amended Articles clearly stipulate that institutions engaging in credit card business are liable and punishable for violations.


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