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To strengthen the supervision of cross-border outsourcing activities by financial institutions and to reflect the amendments to the Civil Code, the Financial Supervisory Commission (the FSC) announced on 8 February 2012 the revised "Amendments to Regulations Governing Internal Operating Systems and Procedures for the Outsourcing of Financial Institution Operation" (the "Regulations"). The major amendments are as follows:
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Amendments to the Required Documents for Cross-Border Outsourcing Application
Article 18 sets forth the required documents for cross-border outsourcing application, which include a written confirmation from the financial regulator of the overseas service provider. Such confirmation should cover the following statements: (i) the foreign financial regulator agrees that the overseas service provider may, upon the request of the FSC, provide information related to the outsourcing matters; and (ii) the foreign financial regulator agrees that it will not acquire information of Taiwanese clients and it will notify the FSC in advance if, to perform its supervisory duties, it must do so. The foregoing provisions are to ensure that the FSC may obtain information required for supervision and to protect interest of Taiwanese clients.
Furthermore, if the financial regulator of the overseas service provider asks a financial institution to provide information on any Taiwanese client, the financial institution is not allowed to provide such information until it obtains approval from the FSC.
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Taiwan Banks Are Not Allowed to Outsource Matters regarding Consumer Banking Information System to Outside of Taiwan
Paragraph 5, Article 18 of the Regulations stipulates that Taiwan banks are not allowed to outsource matters regarding consumer banking information system (including data logging, processing, and output) to outside of Taiwan, because Taiwan banks are supposed to be able to provide complete services to clients in Taiwan and for the purpose of protection of client's personal information.
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Requirements to be Met when Making Cross-Border Outsourcing
A financial institution should be able to monitor its overseas service provider's use, process and control of client information and to ensure there is no irregularity. Therefore, Article 19 of the Regulations requires that a financial institution should examine and supervise the performance of its overseas service provider regularly and from time to time.
