Industrial Innovation
1.Draft Amendment to Statute for Industrial Innovation for public consultation
On 4 October 2024, the Ministry of Economic Affairs announced the draft amendment to “Statute for Industrial Innovation.” We summarize below:
(1) To extend the period of tax benefit for enterprises investing in specific products or services.
(2) To add new items eligible for investment tax credit and raise the upper limit of applicable expenses to NT$1.8 billion.
(3) To limit the applicable scope of the requirement that enterprises making overseas investment of NT$1.5 billion or more shall obtain prior approval, and the central competent authority will have discretion to determine the method of approval or rejection.
(4) To revise the threshold for capital contributions in limited partnership venture capital enterprises eligible for tax benefit, as well as the required proportion and amount of investment in innovative startups.
(5) To add tax benefit for individuals making cash investments in specific high-risk innovative startups.
(6) To add penalties on companies failing to perform the specific actions ordered by the central competent authority due to incompliance when making investment.
Reported by: Stacy Lo / Joe Liao
Third-Party Paymen
2.Draft Regulations Governing Identification and Control Measures for Customers Suspected of Fraud for Third-Party Payment Service Providers for public consultation
On September 27, 2024, the Ministry of Digital Affairs (MODA) announced the draft “Regulations Governing Identification and Control Measures for Customers Suspected of Fraud for Third-Party Payment Service Providers.” We summarize below:
(1) A customer may be classified as potentially involved in fraudulent crimes (Suspicious Fraud-related Customers) if they have any of the following conditions:
(a) Holding an account flagged by a court, prosecutor’s office, or judicial police authority as suspiciously related to fraudulent crime (Suspicious Fraud Account).
(b) Holding an account informed by other financial institutions or third-party payment service providers (TPPSP) as a Suspicious Fraud Account.
(c) Other circumstances considered by the TPPSP as potentially involving fraudulent crimes.
(2) TPPSPs shall establish internal fraud prevention measures and regularly inspect and produce evaluation report.
(3) The TPPSP that identify customers as potentially involving fraudulent crimes may notify other TPPSPs in writing or electronically
(4) TPPSPs shall implement enhanced due diligence on Suspicious Fraud-related Customers.
(5) Upon implementing enhanced due diligence, TPPSPs may refuse to establish a business relationship or provide services if a customer:
(a) Fails to cooperate with identity verification processes or provide necessary documentation.
(b) Appears to use anonymous or false names, or uses entities that are not genuine.
(c) Submits forged or altered identification documents.
(d) Provides unclear or suspicious documentation and refuses to provide further supporting evidence.
(e) Delays providing required identity verification documents.
(6) After conducting enhanced customer due diligence, TPPSPs may continue to review and verify the customer’s identity if deemed necessary.
(7) TPPSPs may suspend services or delay the release of funds for no less than 15 days if the customer is suspected of engaging in fraudulent crimes or refuses to cooperate with enhanced identity verification procedures after conducting enhanced customer due diligence and may report to the judicial police authorities via designated communication channels.
(8) After being notified under above provision, the judicial police authorities shall respond within 5 days with further instructions on whether the TPPSP shall continue to delay payments or release the funds. TPPSPs shall comply with these instructions, which may include extended control periods of up to 2 years.
(9) TPPSPs shall investigate all transactions linked to Suspicious Fraud Account notified by judicial police authorities. If fraudulent funds have already been disbursed, TPPSPs are required to notify both the recipient’s bank and the original reporting authority.
(10) A TPPSP receiving the notice under above provision shall suspend the service or delay the payment of such Suspicious Fraud Account for 2 years, which subject to further notice by the reporting authority, can be extended for additional 1 year for once.
(11) Customers who believe their account is not or no longer a Suspicious Fraud Account may submit evidence to the judicial police authority to request the removal of the suspension. The judicial police authority shall review the necessity of such suspension within 30 days and inform the customer the decision.
(12) TPPSPs are required to maintain all necessary transaction records of Suspicious Fraud-related Customers for at least 5 years. Additionally, records obtained for customer identity verification and business transaction information, among others, shall be preserved for at least 5 years after the end of the business relationship.
Reported by: Stacy Lo / Mandy Wu
Virtual Currency
3.Draft Amendments to Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platform or Transaction for public consultation
On 4 October 2024, the Financial Supervisory Commission (FSC) announced the draft amendments to the “Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platform or Transaction” for public consultation. We summarize below:
(1) The virtual asset service providers under these Regulations refer to those who have business operations within the territory of the R.O.C. and are limited to those who have completed registration in accordance with the “Regulations on Anti-Money Laundering Registration of Businesses or Personnel Providing Virtual Asset Services”, and the provision that these Regulations do not apply to designated non-financial businesses or personnel are removed.
(2) Virtual asset service providers should produce a risk assessment report annually and report it to the FSC by the end of March of the following year.
(3) The virtual asset service providers should establish an internal control and audit system for anti-money laundering and countering terrorism financing in accordance with the Money Laundering Control Act, the Counter-Terrorism Financing Act, and other relevant regulations, with respect to their risk of money laundering and terrorism financing, as well as the scale of their business.
(4) The virtual asset service providers should allocate sufficient qualified compliance personnel.
Reported by: Stacy Lo / Scott Chuang
4.Draft Regulations on Anti-Money Laundering Registration of Businesses or Personnel Providing Virtual Assets Services for public consultation
On 4 October 2024, the FSC announced the draft “Regulations on Anti-Money Laundering Registration of Businesses or Personnel Providing Virtual Assets Services ” for public consultation. We summarize below:
(1) The virtual asset service providers should register separately according to the type of business it operates, and should not operate a business requiring license or approval in accordance with other laws and regulations without a license or approval.
(2) The virtual asset service providers shall commence business within six months from the date of the anti-money laundering registration completed with the FSC, and shall not commence business without joining the R.O.C Virtual Asset Service Provider Association.
(3) The internal control systems of virtual asset service providers should ensure that the virtual assets it provides services do not have legality issues, and that relevant systems should be established for information systems and security, customer complaint handling, disclosure of information announcements, and record keeping.
(4) The virtual asset service providers may handle the receipt and payment of fiat currency involved in virtual asset transactions in accordance with business needs, and with the customers’ consent, retain the customer’s fiat currency in their deposit account in the same currency opened at a financial institution.
(5) The virtual asset trading platforms should establish a system for reviewing the launching and removal of virtual assets, formulate and announce their trading rules, and establish a system to prevent unfair trading.
(6) The virtual asset transfer agents should establish and announce their virtual asset transfer rules; the virtual asset custodians should segregate customer assets in its custody from its own property and establish clear custodial procedures; and the virtual asset underwriters should announce information about the virtual assets they underwrite and establish and announce their virtual asset underwriting rules.
Reported by: Stacy Lo / Scott Chuang
Electronic Payment
5.Amendment to Rules Governing Administration of Electronic Payment Business
On 11 October 2024, the FSC announced the amendment to the “Rules Governing Administration of Electronic Payment Business”. We summarize below:
(1) To expand the scope of transactions where the automatic payment deductions for a non-specific amount may apply, and stipulate relevant risk control mechanisms;
(2) To add that, delivery platform enterprises, taxi transportation service platform enterprises and parking service platform enterprises may be contracted merchants although they are not the ultimate recipient of payments, and stipulate the requirements for such enterprises; and
(3) To add the regulations on cloud outsourcing operations by specialized electronic payment institutions.
Reported by: Stacy Lo / Mandy Wu
Securities
6.Open up foreign virtual asset ETFs for professional investors
On 1 October 2024, the FSC issued a ruling to include “foreign virtual asset ETFs” as one of the permissible financial products under consigned trading of securities firms, provided that the qualified investors are limited to professional investors only.
Based on the above, the Taiwan Securities Association also added Article 6-3 of the “Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities”(Regulations) and related internal control systems. In addition to clearly defining the scope of professional investors, the Regulations also request to establish an appropriate product suitability system for virtual asset ETFs, a risk disclosure statement for initial purchases of such products, and impose an obligation to provide product information, as well as regular internal education and training, among other requirements.
Reported by: Jeffrey Liu / Eva Chiu
7.Amendments to Article 13-1 and 15-3 of Rules Governing Securities Firms Accepting Orders to Trade Foreign Securities
On 25 September 2024, the Taiwan Securities Association (TSA) announced the amendments to Article 13-1 and 15-3 of the Rules Governing Securities Firms Accepting Orders to Trade Foreign Securities. We summarize below:
(1) To specify the disclosure and control operation of the securities firms when entrusted by professional investors for the electronic trading of offshore structured products; and
(2) To allow that depositary receipts and beneficiary certificates can be the subject of regular savings plans and constant share under consigned trading
Reported by: Jeffrey Liu / Amy Su
SITE/SICE
8.Draft Amendment to Article 24 of “Standards Governing the Establishment of Securities Investment Consulting Enterprises”
On 1 October 2024, the FSC announced the draft amendment to Article 24 of “Standards Governing the Establishment of Securities Investment Consulting Enterprises”. The key point of the amendment is to relax the financial requirements for trust enterprises concurrently operated by banks, allowing them to use capital adequacy as the financial condition for operating discretionary investment services or securities investment consulting services, not subject to the restriction that the net asset value per share must not be lower than the par value, as reflected in the most recent audited financial statements.
Reported by: Jeffrey Liu / Winnie Su
9.Draft Amendment to Article 24 of “Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises”
On 14 October, 2024, the Financial Supervisory Commission (FSC) announced the draft amendment to Article 24 of the “Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises,” adding that when a securities broker acts as a fund distributor and subscribes to a securities investment trust fund under the name of the investor, the subscription amount can be debited from the investor’s retained funds in the separate account ledger of the securities firm’s settlement account established under the Regulations Governing Securities Firms and transferred to the segregated fund account, without being subject to the restriction that subscription amounts must be remitted directly to the segregated fund account by the subscriber.
Reported by: Jeffrey Liu / Jason Su
| Editors Mike Lu (Partner) Stacy Lo (Partner) Jeffrey Liu (Partner) Kang-Shen Liu (Partner) David Tsai (Partner) Angela Lin (Partner) Paul Hsu (Partner) | Counselors: Echo Yeh Sue Su Jolene Wang (Lexcel Partners IP Firm) |