Newsletter
RULES FOR ACCEPTING RE-QUESTS FOR INFORMATION ON OPENING OFFSHORE HEAD OFFICE DEPOSIT ACCOUNTS
In line with the commitments on banking ser-vices made by Taiwan upon her WTO accession, the Ministry of Finance (MOF) has authorized the Taiwan branches of foreign banks to make available application forms and related informa-tion to Taiwan residents to enable them to open accounts at the banks' overseas head offices. In an order dated 2 January 2002, the MOF an-nounced the Points for Attention by Taiwan Branches of Foreign Banks When Accepting Customers' Requests for Information on Opening Deposit Accounts with Their Head Offices. The rules intend to ensure that when local branches of foreign banks provide services related to over-seas deposit account opening by Taiwan resi-dents, they comply with the prudential regulation principles applied by Taiwan's regulatory au-thority. The main points are as follows:
To protect the rights and interests of domestic residents, the MOF requires that the information to be provided by a branch of a foreign bank regarding the opening of an account with its head office include: (1) a deposit account application form and related documents; (2) instructions for filling out the application form; and (3) infor-mation regarding deposit interest and the method of calculating earnings. To enable customers to obtain sufficient information to understand their rights and to assess the risk of opening an ac-count overseas, branches must also clearly in-form customers of the interest rate of deposit account, the method of calculating interest, whether the account is protected by any deposit insurance, and the applicable charges, and must explain that funds deposited with the head office are not protected by the Taiwan's deposit insur-ance scheme.
Furthermore, branches of foreign banks may only passively accept customers' requests to provide such account opening information. They may not employ any active means such as ad-vertising, promotional activities, displaying lit-erature on counters, public announcements or mailing to encourage or entice customers to ob-tain information about opening such accounts.
According to the supplementary commitments in the schedule of Taiwan's WTO entry commit-ments with regard to banking services, when a local customer applies to open an overseas de-posit account, the application form must be sent by the customer directly to the overseas head office of the foreign bank for approval. The customer must directly convey the documents to the overseas bank's head office and undertake account opening procedures in accordance with the local laws of the territory where the foreign bank's head office is located (such as banking law, anti-money laundering law, etc.), and in accordance with the head office's rules for opening deposit accounts. Therefore, after the Taiwan branch provides such information at a customer's request, the branch may not fill out the application form for the customer, process or approve the customer's application or receive deposits on its head office's behalf, or transmit the application form to its head office on the customer's behalf.
With regard to customer information and risk management, when providing account opening information at a customer's request, a branch should confirm the customer's identity and retain customer details. It should also make an decla-ration form of disclosure of customers' account opening information, which it should ask the customer to sign and should retain for inspection for at least five years. A sample copy of the declaration form should be filed with the MOF.
The above rules are clear for foreign banks and their Taiwanese branches to follow and are wel-comed. But it remains to be seen whether it will provide sufficient incentive for foreign banks to set up channels for Taiwan residents to legally open overseas accounts.