Taiwan Stock Exchange - Rules & Regulations Directory

Amended Article

Title:

Regulations Governing Offshore Securities Branches 

Amended Date: 2017.08.18 

Article 5
    An offshore securities branch, within 3 months after the end of each fiscal year, shall file with the competent authority the balance sheet and the statement of comprehensive income audited and attested by certified public accountants (CPAs).
    An offshore securities branch, within 10 days after the end of each quarter and each month, shall file financial and business information, including the respective quarterly business statements, monthly balance sheets and monthly business statements through the "One-Stop Window for Securities Firm Filings" in the relevant statement format.
    The statements to be filed pursuant to paragraph 1 shall be prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms.
    The format, content, and filing method of the statements to be filed pursuant to paragraph 2 will be prescribed by the FSC in consultation with the CBC.

Article 13-1
    An offshore securities branch shall rigorously undertake Customer Due Diligence(CDD) measures in accordance with the provisions of the Money Laundering Control Act, the Terrorism Financing Prevention Act, the requirements of the competent authority regarding documents, materials, or information that must be obtained or verified (as specified in the attachment), and the provisions of the Guidelines Governing Anti-Money Laundering and Countering Terrorism Financing of Securities Firms adopted by the Taiwan Securities association, and incorporate the measures into its internal control and internal audit items.
    For customers that were pre-existing customers before the enforcement of the provisions of these Regulations that were amended and issued on 18 August 2017, an offshore securities branch shall re-perform CDD measures and review their degree of risk by 31 December 2017. However, the CDD measures shall be re-performed immediately under the following circumstances:
  1. When there is any doubt about the veracity of a customer's information, such as when a suspected money laundering transaction by the customer is discovered, or when any material change occurs in the operation of the customer's account that is not consistent with the customer's business profile.
  2. When the time arrives for regular updating of the customer's identity information.

Article 13-2
    An offshore securities branch may rely on overseas institutions or professionals (hereinafter, "intermediaries") to assist in performing CDD measures for offshore customers in accordance with the provisions of these Regulations and the Money Laundering Control Act, or with standards not less strict than the aforesaid provisions. The following requirements shall be met, and the execution plan and list of intermediaries shall be filed with the FSC for recordation:
  1. The intermediary's actions in assisting the offshore securities branch to perform CDD measures shall comply with or do not violate the laws and regulations of the place where the intermediary is located.
  2. The intermediary is registered in a jurisdiction that is supervised by a signatory member of the International Organization of Securities Commissions Multilateral Memorandum of Understanding, and shall hold relevant business licenses and be supervised by a competent authority of that jurisdiction.
  3. The intermediary has been rated satisfactory, without downgrade, or without material deficiency in the most recent AML/CFT audit by the competent authority or an external institution in the jurisdiction where it is located; or the intermediary's relevant deficiencies have been remedied and recognized as remedied or it has been upgraded after being downgraded. If the intermediary is subsequently downgraded by a competent authority or external institution in the jurisdiction where it is located, or sanctioned by a competent authority in that jurisdiction for any material deficiency, the offshore securities branch shall halt its reliance on assistance by that intermediary in performing CDD until improvements by the intermediary have been recognized.
  4. The offshore securities branch shall enter into a cooperation agreement with the intermediary, specifying the scope of assistance provided for CDD measures and appropriate measures for customer data confidentiality and data preservation, and clearly assigning the rights and responsibilities of each party. The intermediary shall keep records of the assistance measures it carries out, and shall be able, whenever requested by the offshore securities branch, to promptly provide any documents or information obtained when assisting in performing CDD.
  5. The offshore securities branch shall use a risk-based approach (RBA) to audit and supervise, regularly and from time to time, the intermediary's execution of assistance in CDD measures and its use, processing, and management of customer data. The offshore securities branch may engage external institutions to conduct related auditing.
    The scope of the intermediaries referred to in the preceding paragraph means the following overseas institutions or professionals:
  1. A subsidiary or branch of the securities firm to which the offshore securities branch belongs, a financial institution with which that securities firm has an equity investment relationship, or another financial institution recognized by the Competent Authority.
  2. A professional such as a lawyer or certified public accountant.
    The execution plan referred to in paragraph 1 shall include at least the scope of the intermediary's assistance for CDD measures, and the internal control system for customer data confidentiality and data preservation.
    An offshore securities branch shall review the results of CDD measures assisted by intermediaries, and shall be held ultimately responsible for the CDD and data preservation.

Article 13-3
     An offshore securities branch shall pay close attention to the following matters when opening a new account:
  1. An offshore securities branch may not refer an onshore customer to an agent company, or induce or assist an onshore customer to convert to a non-resident identity, to open an account under the offshore securities branch.
  2. An offshore securities branch shall enhance its understanding of the purpose of the opening of a new account, the intended use of the account, and planned transaction activity. If an offshore juristic person customer is suspected to have any onshore natural person or juristic person among its shareholders, directors, or beneficial owners, the offshore securities branch shall further obtain a statement by the customer that it has not been induced to convert, or for the purpose of investing in any certain product converted, to a non-resident identity.
     The offshore securities branch shall formulate a concrete and feasible internal control system with respect to the provisions of the preceding paragraph, and the system shall be rigorously implemented after being reported to and approved by the board of directors.

Article 14
    These Regulations shall come into force from the date of issuance, with the exception of Article 13-1, paragraph 1 and Articles 13-2 and 13-3 amended on 18 August 2017, which shall come into force from 1 January 2018.

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