Directions Governing Banking Enterprises for Operating Foreign Exchange Business

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[Related Regulations]

Title：

Directions Governing Banking Enterprises for Operating Foreign Exchange Business

Announced Date： August 6, 2003

Amended Date： January 15, 2025（Effective on the same day）

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(Presentation of relevant regulations)

2. When operating foreign exchange businesses, banking enterprises shall follow these Directions in addition to complying with the Regulations Governing Banking Enterprises to Operate Foreign Exchange Businesses (hereinafter referred to as Governing Regulations).

(Export related foreign exchange business)

3. Banks approved by the Central Bank of the Republic of China (Taiwan) (hereinafter referred to as the Bank) to operate foreign exchange businesses (hereinafter referred to as authorized banks) shall abide by the following provisions when operating the export foreign exchange business:

(1)Export Negotiation, Collection, and Factoring Businesses:

i.Documents required: Operate on the basis of transaction documents provided by domestic customers.

ii.Certificates issued: Issue an export negotiation certificate when the foreign exchange earned from exports is exchanged into New Taiwan dollar (NTD); while other transaction certificates shall be issued when the foreign exchange is not sold for NTD.

iii.Data reporting: A daily transaction report and relevant detailed information shall be submitted to the Bank's Foreign Exchange Data Processing System on the next business day following each transaction day.

(2)Export Letter of Credit Advising and Confirming Businesses: Operate in accordance with documents entrusted by foreign correspondent banks.

(Import related foreign exchange business)

4. Authorized banks shall abide by the following provisions when operating the import foreign exchange business:

(1)Documents Required: For issuing of letters of credit, collections, bill acceptances and negotiations, authorized banks shall proceed in accordance with the transaction documents provided by domestic customers.

(2)Percentage of Margin Collected When Issuing a Letter of Credit: An authorized bank may decide of its own accord.

(3)Certificates Issued: Issue an import negotiation certificate when NTD is used to purchase the foreign exchange needed for imports; issue other

(4)Data reporting: A daily transaction report and relevant detailed information shall be submitted to the Bank's Foreign Exchange Data Processing System on the next business day following each transaction day.

(Outward and inward remittance business)

5. Authorized banks and post offices under the Chunghwa Post Co. Ltd. shall act in accordance with the Money Laundering Control Act, Counter-Terrorism Financing Act and relevant regulations, and abide by the following provisions when performing domestic and cross-border outward and inward remittance businesses except the transfer of funds and settlement between a financial institution and another financial institution where both institutions are acting on their own behalf:

(1)Outward Remittance Business:

i.Certificates issued: A foreign exchange sale memo shall be issued when the foreign exchange is purchased with NTD. Other transaction certificates shall be issued when the foreign exchange is not purchased with NTD.

ii.Delivering wire transfers: Wire transfer remittances shall include the required and accurate information of the originator and the required information of the beneficiary.

iii.Providing information: Upon receiving a request from the appropriate competent authorities or the beneficiary bank, provide the originator and beneficiary information within three (3) business days. However when a prosecutors office or judicial police office requests the immediate provision of relevant information, respond accordingly.

(2)Inward Remittance Business:

i.Certificates issued: A foreign exchange purchase memo shall be issued when the foreign exchange is sold for NTD. Other transaction certificates shall be issued when foreign exchange is not sold for NTD.

ii.Take the following risk control measures：

(i)Take reasonable measures, including post-event or real-time monitoring where feasible, to identify wire transfers that lack the required originator or beneficiary information.

(ii)Implement risk-based policies and procedures to determine when to execute, reject, or suspend a wire transfer lacking the required originator or beneficiary information and take appropriate follow-up action where the originator or beneficiary information is insufficient.

(3)Intermediary financial institution：

i.A financial institution that is an intermediary institution shall retain all the wire transfer originator and beneficiary information accompanying the wire transfer.

ii.Where technical limitations prevent the required information accompanying a cross-border wire transfer from being imported to the corresponding domestic wire transfer, according to the Money Laundering Control Act and relevant regulations, the receiving intermediary financial institution shall retain the records of all the information received from the ordering financial institution or another intermediary financial institution.

iii.Items 2 of the preceding Subparagraph shall apply mutatis mutandis.

(4)Data reporting: A daily transaction report and relevant detailed information shall be submitted to the Bank’s Foreign Exchange Data Processing System on the next business day following each transaction day.

The term "originator and beneficiary information" referred to in Items 2 and 3 of Subparagraph 1, Items 2 of Subparagraph 2, and Subparagraph 3 of the preceding paragraph shall mean:

(1)Originator information:

i.Name.

ii.Originator account number where such an account is used to process the transaction. In the absence of an originator account, a unique transaction reference number shall be included to facilitate the traceability of the transaction.

iii.Address. The ordering bank could decide whether to replace address with unified business number, national identification number, passport number, resident certificate number, or date and place of birth.

(2)Beneficiary information:

i.Name.

ii.Beneficiary account number where such an account is used to process the transaction. In the absence of a beneficiary account, a unique transaction reference number shall be included to facilitate the traceability of the transaction.

(Foreign exchange deposit business)

6. Authorized banks shall abide by the following provisions when operating the foreign exchange deposit business:

(1)Operating Restrictions: Shall not be operated with checking deposits.

(2)Foreign Currency Deposit Transfers: Shall be performed by authorized banks; transferees shall deposit the foreign exchange received in a foreign currency deposit account at an authorized bank.

(3)Foreign Currency Time Deposit Pledge: The customer may pledge his/her own foreign currency time deposit to borrow in foreign currency.

(4)Certificates issued: A foreign exchange sale memo shall be issued when the deposited amount is purchased with NTD. Other transaction certificates shall be issued when the foreign exchange is not purchased with NTD. A foreign exchange purchase memo shall be issued when the fund from a foreign exchange deposit is sold for NTD. Other transaction certificates shall be issued when the foreign exchange is not sold for NTD.

(5)Data reporting: A daily transaction report as well as relevant detailed information, and daily foreign exchange deposit report shall be submitted to the Bank's Foreign Exchange Data Processing System on the next business day following each transaction day.

Authorized banks that accept customer's application to open digital foreign currency deposit accounts over the Internet shall abide by the following provisions in addition to the provisions of the "Template of the Operations of Banks Accepting Customer's Application to Open Digital Deposit Accounts over the Internet" (hereinafter referred to as Operations Template) set out by the Bankers Association of the Republic of China:

(1)Counterparties: Customers are limited to those set out in Subparagraph 2, Article 2 of the Operations Template.

(2)Types of account: The types of account shall be in accordance with the descriptions in Article 4 of the Operations Template.

(3)Scope of Business: Businesses conducted over the counter, or through electronic or communications equipment that have been approved by the Bank, reported to the Bank for record, and businesses that may be conducted without making an application. These businesses shall comply with the scope of service provided in Article 4 of Operations Template.

(4)Procedure for commencing the business: An authorized bank shall submit a written application together with a regulatory compliance statement (signed by the head office chief compliance officer, chief auditor and head of information department) to the Bank for record two weeks before commencing the business.

(5)Data reporting: An authorized bank shall submit the end-of-month balance and number of accounts to the Department of Foreign Exchange of the Bank.

[Related Regulations]

(Foreign currency loan business)

7. Authorized banks shall abide by the following provisions when operating the foreign currency loan business:

(1)Counterparties: limited to domestic customers.

(2)Documents Required: foreign transaction documents provided by customers, loan approval documents issued by the Bank, or other documents prescribed by the Bank.

(3)Conversion Restrictions: Foreign currency loans shall not be converted into NTD; this does not apply, however, to foreign currency export loans after exportation.

(4)Data reporting: With regard to the disbursement and repayment of foreign currency loans, daily transaction reports and relevant detailed information shall be filled out with reference to the Instructions for Completing Reports on Short-, Medium-, and Long-Term Foreign Currency Loans Made by Authorized Banks; the monthly balance and turnover amount of such loans shall be tabulated by category into short-, medium-, or long-term loans and submitted to the Department of Foreign Exchange of the Bank.

(5)External debt declaration: While operating the foreign exchange business, if an authorized bank knows that a private enterprise has negotiated abroad a medium or long term foreign currency loan, the authorized bank shall advise the enterprise to comply with the Directions for Declaring Medium- and Long-Term External Debt by Private Enterprises, and notify the Department of Foreign Exchange of the Bank.

The foreign transaction documents, loan approval documents issued by the Bank, or other documents prescribed by the Bank referred to in Subparagraph 2 of the preceding paragraph, and compliance of relevant operational issues will be separately prescribed by the Bank.

(Foreign-currency loan business – combined filing)

8. When a company applies for a single import/export foreign currency loan and the documents provided combine with several import/export transactions, the authorized bank may operate according to the list of transaction documents provided by the company. Each transaction on the list shall be accompanied by a record of the name, number, and date of the transaction document, payment terms or due date, name of the foreign company involved, and the amount of the transaction. The information indicated in the list concerning the transaction shall be authenticated. The company is required to preserve relevant transaction documents for reference.

(Foreign Currency Guarantee business)

9. Authorized banks shall abide by the following provisions when operating the foreign currency guarantee business:

(1)Counterparties: Limited to domestic customers.

(2)Documents Required: Operate in accordance with the documents provided by the domestic customers demonstrating that there is a practical need for the foreign currency guarantee.

(3)Exercise of Guaranteed Debt: Shall be processed in accordance with the provisions of the Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions (hereinafter referred to as Regulations for Declaration).

(4)Data reporting: The balance at the end of the month and the nature of guarantee shall be submitted to the Department of Foreign Exchange of the Bank.

(Business of NTD non-discretionary trust funds )

10. Authorized banks approved to engage in NTD non-discretionary trust funds investing in foreign-currency denominated securities shall abide by the following provisions:

(1)Trustors shall be limited to the followings:

i.A domestic natural person, or a foreign natural person/ citizen of Mainland China who holds a valid Resident Certificate of Taiwan Area, Alien Resident Certificate or an identification document issued by the Ministry of Foreign Affairs.

ii.A domestic legal entity; a foreign legal entity recognized by the ROC government, or whose branch office is registered under the ROC Company Act or Limited Partnership Act.

iii.Other entities approved by the Financial Supervisory Commission (hereinafter referred to as FSC) or the Bank.

(2)Payments and redemptions of the trust funds shall only be handled in NTD instead of in foreign currency.

(3)Data reporting: Authorized banks shall file reports in accordance with the regulations prescribed by the Bank for the business of NTD non-discretionary trust funds investing in foreign-currency denominated securities.

(Business of foreign-currency non-discretionary trust funds)

11. Authorized banks approved to engage in foreign currency non-discretionary trust funds investing in foreign-currency denominated securities shall abide by the following provisions:

(1)Trustors shall be limited to the followings:

i.Counterparties listed under Subparagraph 1 of the preceding point.

ii.A foreign natural person or a citizen of Mainland China who holds a valid entry visa and has opened a foreign currency deposit account at the authorized bank in accordance with the relevant account opening regulations prescribed by FSC.

(2)Trustors shall open foreign currency deposit accounts at the authorized bank.

(3)Payments and redemptions of the trust funds shall only be handled in foreign currency instead of in NTD.

(4)When the trustor is the beneficiary, the trustor's beneficial rights in the trust may be pledged as the collateral for a loan in accordance with the Trust Enterprise Act and other relevant provisions.

(5)Data reporting: Authorized banks shall file reports in accordance with the regulations prescribed by the Bank for the business of foreign-currency non-discretionary trust funds investing in foreign-currency denominated securities.

When an authorized bank engages in the business set out in Article 17-1 of the Governing Regulations, the trustor shall be limited to those mentioned in Subparagraph 1 of the preceding paragraph.

(Foreign exchange business via automated service equipment)

12. Authorized banks that set up automated service equipment for foreign exchange business shall abide by the following provisions:

(1)In the case of providing cross-bank foreign currency cash withdrawal services for ATM/debit card holders via deduction from NTD accounts, the automated service equipment shall have a function that enables the customer making cross-bank cash withdrawal to indicate whether he/she is a non-resident.

(2)When handling foreign currency cash deposits/withdrawals and exchange of NTD/foreign currency cash, authorized banks shall report daily, in their own names, to the Bank the aggregate transaction information sorted by the identity of customers without listing individual transaction information, i.e. remittance serial number, customer's identification number, foreign currency amount, code of remittance classification, and destination of the remittance.

(Processing and merchanting trade )

13. When an authorized bank's foreign exchange business for imports/exports and inward/outward remittances involves processing trades and merchanting trades, the authorized bank shall issue the import/export negotiation certificates, foreign exchange purchase/sale memos or other transaction certificates and submit relevant data to the Bank's Department of Foreign Exchange in accordance with the prescribed instructions.

(Purchase and Sale of foreign currency cash and traveler's check business)

14. Banking enterprises shall comply with the following provisions when processing the purchase and sale of foreign currency cash and traveler's checks:

(1)Exchange rate determination shall comply with relevant regulations prescribed by the Department of Foreign Exchange of the Bank.

(2)Authorized banks shall issue a foreign exchange sale (purchase) memo after accepting a customer's request for purchasing and selling of foreign currency cash or traveler's checks. In the case of individual foreign exchange settlement against NTD with a value equal to or greater than an equivalent of NTD 500,000, authorized banks shall comply with the "Regulations for Declaration" and the "Directions for Banking Enterprises while Assisting Customers to Declare foreign exchange receipts and disbursements or Transactions".

(3)Banking Enterprises shall post a signage for this business in Chinese and English in a conspicuous place outside the door.

(4)Banking enterprises approved by the Bank to buy/sell foreign currency cash and traveler's checks with a value equal to or less than an equivalent of USD 5,000 per transaction at airports or other temporarily installed exchange outlets may adopt simplified declaration procedures with prior notification to the Bank, where the Banking enterprise shall report daily, in its own name, to the Bank the aggregate foreign currency purchases/sales made by nationals and foreigners sorted by currency using "XC" for country code without listing individual transaction information, i.e. customer's identification number, country code and nature of remittance.

(5)Non-authorized banks, credit cooperatives, and credit departments of farmers' (fishermen's) associations engaging in the purchase and sale of foreign currency cash and traveler's checks shall comply with the following provisions:

i.They may open foreign currency deposit accounts at authorized banks, but shall not establish correspondent relationships with foreign banks or other financial institutions outside the territory of the Republic of China.

ii.Subject to the provisions of the relevant regulations on the foreign currency risk limit prescribed by the relevant competent authority for financial institutions, they may hold overbought foreign exchange positions as long as such positions do not exceed the maximum amount permitted by the Bank; the limit on the oversold foreign exchange position is zero.

iii.They may proceed to purchase (or sell) foreign exchange needed for operating this business from authorized banks pursuant to the Regulations for Declaration, and are not obliged to enquire and count the annual aggregate settlement amount. However, the name of the business and the number of approval letter from the Bank shall be noted on the Declaration Statement of Foreign Exchange Receipts and Disbursements or Transactions.

iv.Data reporting: A daily transaction report and relevant detailed information shall be submitted to the Bank's Foreign Exchange Data Processing System on the next business day following each transaction day.

(Credit card, ATM card, and debit card business)

15. For an entity engaging in the credit card, ATM card, debit card or cash card business involving foreign exchange, its head office shall report to the Bank for record before commencing the business. For credit card and debit card businesses related to Mainland China Area, an approval letter should be obtained from FSC before commencing the business. All shall abide by the following provisions:

(1)When issuing a card to a foreign natural person, the card-issuing institution shall strengthen the credit check and repayment evaluation of the cardholder, and pay attention to the risks.

(2)For transactions involving the foreign exchange settlement against NTD, the Regulations for Declaration and other relevant regulations should be followed.

(Certificates)

16. The certificates issued by banking enterprises for foreign exchange businesses shall be accurately filled out in accordance with the Code and Description of Outward and Inward Remittance Classification and the Instructions for Issuing Various Certificates In Connection with Foreign Exchange Business. Banking enterprises shall deliver the certificates to customers or process them in a manner as agreed with customers.

Banking enterprises may determine on their own the formats of imports/exports negotiation certificates, foreign exchange purchase/sale memos and other transaction certificates issued in connection with foreign exchange businesses.

The certificates issued by banking enterprises for foreign exchange businesses may be produced in electronic form in accordance with the relevant provisions of the Digital Signature Act and its Enforcement Rules.

(Reporting)

17. Banking enterprises engaging in foreign exchange businesses shall, based on the type of business, file the following reports with the established format:

(1)Daily Report of Foreign Exchange Position.

(2)Daily Transaction Report of Export and Inward Remittances.

(3)Daily Transaction Report of Import and Outward Remittances.

(4)Daily Report of Foreign Exchange Deposits.

(5)Daily Report of Foreign Exchange Forwards.

(6)Daily Transaction Report of NT Dollar Exchange Rate Options.

(7)Daily Report of NT Dollar Foreign Exchange Non-Delivery Forwards on [electronic] medium.

(8)Daily Report of Foreign Liability Balance.

(9)Monthly Balance Report of Foreign Currency Loan and Foreign Currency Guarantee.

(10)Monthly Report of Foreign Exchange Transactions Involving a Third Currency.

(11)Monthly Report of NTD Loans to Foreigners without Residence in Taiwan by Domestic Financial Institutions.

(12)Daily Transaction Report of Purchase and Sale of Foreign Currency Banknotes and Traveler's Checks.

(13)Monthly Report of NTD Deposits of Non-Residents.

(14)Ten-Day Reserve Report of Bank’s Foreign Currency Deposits and Other Liability.

(15)Monthly Report of Renminbi Business (CNY1 ~ CNY5).

(16)Quarterly Transaction Report of Foreign Currency Banknotes and Traveler's Checks Business.

(17)Monthly Report of digital foreign currency deposit accounts.

(18)Other designated reports.

The Bank will prescribe the format, contents, and instructions for reports mentioned in the preceding paragraph as well as the format and audit of the transaction reports and relevant detailed information of banking enterprises.

(Operating manuals and other explanatory information)

18. Banking enterprises engaging in foreign exchange businesseses shall refer to the following operation manuals and instructions for operating the relevant systems and filing the reports:

(1)Connection Operation Manual of the Bank’s Foreign Exchange Data Processing System.

(2)Description of Renminbi Business.

(3)Instructions for Completing Reports on Short-, Medium-, and Long-Term Foreign Currency Loans Made by Authorized Banks.

(4)Code and Description of Inward and Outward Remittance Classification.

(5)Instructions and Reference Formats for issuing Various Certificates of Foreign Exchange businesses.

(6)Instructions for Issuing Certificates and Data Reports about Processing Trade and Merchanting Trade Businesses.

The operation manual and instructions mentioned in the preceding paragraph will be separately prescribed by the Bank.