Jump to the main content block
Laws and Regulations Database of the Central Bank of the Republic of China-Article Content

Title: Regulations Governing Foreign Exchange Business of Banking Enterprises Inactive Regulations Open new window for Chinese

Announced Date:July 23, 2003

Date:


Chapter 2 Commencement of Foreign Exchange Business

A banking enterprise shall apply to the Central Bank of the Republic of China (Taiwan)(hereinafter referred to as the Bank) for engaging in foreign exchange business, and may engage in the said business only after being issued a certificate of authorization or a letter of approval.

Foreign exchange business may not be operated without the approval of the Bank.

A bank may apply for engaging in all or part of the business categories listed in Paragraph 1 of Article 4.

Credit cooperatives, the credit departments of farmers' or fishermen's associations may apply for purchasing and selling foreign currency cash and traveler's checks.

The Chunghwa Post Co., Ltd. may apply for engaging in international remittances , purchasing and selling foreign currency cash and traveler's checks.

Unless otherwise provided by these Regulations or other laws and regulations, domestic and foreign banks within the territory of the Republic of China that apply to the Bank for engaging in foreign exchange business (hereinafter referred to as authorized banks) shall comply with the following provisions:

1.Domestic banks shall: (1)Maintain capital to risk-weighted assets ratio at 8% or above; (2)Deploy sufficient experienced personnel for conducting foreign exchange business; (3)Participate in joint processing of foreign exchange business with other authorized banks for an accumulated amount up to United States dollars 400 million or up to 7,000 transactions; and (4)Maintain a sound financial position for the last three years.

2.Foreign banks shall be approved by Financial Supervisory Commission, Executive Yuan (hereinafter referred to as "FSC") to establish branches in Taiwan.

When a bank applies to FSC for establishing a foreign department to engage in foreign exchange business, FSC shall forward the application to the Bank to review qualifications prescribed in Subparagraph 1 of the preceding Paragraph.

Foreign banks approved to engage in foreign exchange business within the territory of the Republic of China may remit inwardly or outwardly capital or working capital only after having obtained a separate approval from FSC.

Banks intending to become authorized banks shall submit written applications with the following documents to the Bank for approval:

1.Documents evidencing FSC's approval for registered establishment;

2.Scope of foreign exchange business;

3.Names and locations of overseas correspondent banks;

4.Name and address of the statutory responsible person within the territory of the Republic of China;

5.Capital and working capital to be remitted to the territory of the Republic of China, as well as the categories and amounts of foreign exchange funding sources; and

6.Other data or documents specified by the Bank.

When engaging in foreign exchange business listed in Subparagraphs 1 through 6, Paragraph 1, Article 4, the operations and auditing personnel of an authorized bank shall hold foreign exchange business licenses or meet the following qualifications:

1.An operations personnel shall have at least three-month experience in the relevant foreign exchange business.

2.An auditing personnel shall have at least six-month experience in the relevant foreign exchange business.

When engaging in foreign exchange derivatives business listed in Subparagraph 7, Paragraph 1, Article 4, the operations and management personnel of an authorized bank shall meet at least one of the following qualifications:

1.To have completed courses on derivatives and risk management held by domestic or foreign financial training institutions, the total amount time spent on attending the courses shall be at least 3 months;

2.To hold a foreign exchange derivatives business license;

3.To have one year training or internship in foreign exchange derivatives business at a domestic or foreign financial institution;

4.To have at least six-month working experience in foreign exchange derivatives business at domestic or foreign financial institutions.

An authorized bank may engage in foreign exchange forward and swaps transactions without application. However, to engage in any other foreign exchange derivatives business, an authorized bank shall submit the following documents according to the type of business intended and apply to the Bank for approval:

1.Foreign exchange derivatives business involving the New Taiwan dollar exchange rate: Submit a statement of regulatory compliance, resolution of board of directors to apply for foreign exchange derivatives business for domestic banks or letter of authorization from the head office or regional command centers for foreign banks, product profiles, operational guidelines, risk management, risk disclosure statements, and curriculum vitae of the relevant personnel.

2.Any structure combination of foreign exchange derivatives business in the preceding item with other business already authorized by the Bank or other competent authorities: Submit documents listed in the preceding subparagraph.

3.Foreign exchange derivative business not involving the New Taiwan dollar exchange rate: For first time application by an authorized bank to engage in foreign exchange derivatives business or new financial products not yet approved by the Bank, documents listed in Item 1 shall be submitted.

4.Foreign exchange derivatives business (not involving the New Taiwan dollar exchange rate) already approved by the Bank and further structure combinations thereof: Before engaging in this business, submit a statement of regulatory compliance, resolution of board of directors to apply for foreign exchange derivatives business for domestic banks or letter of authorization from the head office or regional command centers for foreign banks, risk disclosure statement, and curriculum vitae of the relevant personnel. However an authorized bank may engage in structure combination of foreign exchange derivatives that involve products in the same categories and that are created through the same transaction contracts without application.

When an authorized bank, which has been approved to conduct derivatives business pursuant to the preceding regulation, engages in the foreign exchange derivatives business not involving the New Taiwan dollar, it should submit to the Bank a product profile, product introduction, and the documents required under Item 4 of the preceding paragraph within one week after such business has commenced for record. If within three (3) weeks after receiving such report , the Bank does not object thereto, the Bank's silence shall be deemed an approval for record.

The scope of the afore-mentioned foreign exchange derivatives business not involving the New Taiwan dollar shall be determined by the Bank separately.

To engage in electronic business involving foreign exchange, authorized banks shall submit a description of relevant procedures when applying to the Bank. Authorized banks applying for engaging in foreign exchange receipts and disbursements or transactions with values equal to or over New Taiwan dollars 500,000 on the Internet shall first pass the test of the Online Civil Outward/Inward Remittances Declaration Yearly Aggregate Settlement Amount Query System, and also be capable of performing computerized review of transaction contents such as classification of remittances.

Before offering services in foreign exchange receipts and disbursements or transactions on the Internet, an authorized bank shall first request the customer to visit the bank in person to apply for and follow the procedures stipulated. The authorized bank shall verify the customer's identification documents or basic registration information when processing an application.

To engage in foreign exchange business outside business hours, an authorized bank shall submit a description of relevant procedures when applying to the Bank, and shall comply with the following rules:

1.The amount of each foreign exchange settlement shall be limited to New Taiwan dollars 500,000 or its equivalent in foreign currency; and

2.Foreign exchange transactions conducted outside business hours shall be included in the "Daily Transaction Report" and "Daily Foreign Exchange Position Report" on the following business day.

The provisions of Item 1 of Article 17 shall apply, mutatis mutandis, when branches of authorized banks and non-authorized banks and their branches have been authorized by the Bank to engage in the purchasing and selling of foreign currency cash and traveler's checks outside business hours.

Transactions conducted under the afore-mentioned business shall be included in the "Daily Transaction Report" and "Daily Foreign Exchange Position Report" on the following business day by the branches of authorized banks. Non-authorized banks and their branches shall include the transactions in the "Daily Transaction Report" on the following business day.

If a relocation or name change is made by the branches of authorized banks, non-authorized banks and their branches, the head office of credit cooperatives and their branches, or the credit departments of farmer's or fishermen's associations and their branches that have been approved to engage in the foreign exchange business pursuant to Articles 11, 19, 22 and 23, depending on the type of situation, it is required for them to apply for a new certificate or notify the Bank within a week after the receipt of a business license or approval certificate. In the event of relocation, the curriculum vitae of operations and auditing personnel shall also be submitted to the Bank.

If the relocation or name change is made by the post offices under the Chunghwa Post Co., Ltd., which have been permitted to engage in foreign exchange business pursuant to the preceding provisions, it is necessary for them to notify the Bank within a week after the receipt of the letter issued by FSC or the letter issued by its head office. In the event of relocation, the curriculum vitae of operations and auditing personnel shall also be submitted to the Bank.

The provisions of Subparagraph 1 of Article 17 shall apply, mutatis mutandis, to credit cooperatives and the credit departments of farmers' or fishermen's associations and their branches that have been authorized by the Bank to engage in the purchasing and selling of foreign currency cash and traveler's checks, as well as to post offices under the Chunghwa Post Co., Ltd. that have been authorized by the Bank to engage in international remittances, purchasing and selling foreign currency cash and traveler's checks.

Transactions conducted under international remittances and purchasing and selling of foreign currency cash and traveler's check transactions by the afore-mentioned banking enterprises outside business hours shall be included on the ''Daily Transaction Report'' or ''Daily Details Table''on the following business day.

The Bank may reject a banking enterprise's application for foreign exchange business in the event of any of the following:

1.Qualifications of the applicant do not comply with regulations;

2.The applicant has failed to fully assist declarants to fill out the Declaration Statement of Foreign Exchange Receipts and Disbursements or Transactions(hereinafter referred to as Declaration Statement);

3.A high number of errors in the certificates, reports and forms prepared by the applicant;

4.The applicant had seriously violated the provisions of these Regulations and was rectified by the Bank, but has failed to improve within the period specified by the Bank;

5.There is evidence indicating that the applicant may hinder sound operations of the business, or that the applicant is unable to meet financial policy requirements.

The Bank may revoke or cancel its approval to any banking enterprise engaging in foreign exchange business in the event of any of the following:

1.The banking enterprise fails to commence operation within six months after being issued a certificate of authorization or letter of approval. The applicant may request for an extension with appropriate reasons. If approved, the banking enterprise may have an extension of no more than three months. An institution may apply for extension only once;

2.The banking enterprise has seriously violated the provisions of these Regulations and was rectified by the Bank, but has failed to rectify within the period specified by the Bank;

3.After being issued a certificate of authorization or letter of approval, or after being approved to engage in various foreign exchange business, the banking enterprise was found to have provided false information in its application which is deemed a serious violation; or

4.The banking enterprise suspends operations, is dissolved, or declares bankruptcy.

:::