The Financial Supervisory Commission (“FSC”) announced the “Operation Directions of Financial Institutions Applying for Stationing at Local Asset Management Zone and Business Trial” (“Operation Directions”) on 1 April 2025. We summarize below:
1.Banks
(1) Qualifications:
A. Being approved by the FSC to conduct high-asset customers business and having conducted such business; and
B. Having signed a memorandum of understanding with the local government of Local Asset Management Zone and obtained certificates of stationing at Local Asset Management Zone issued by the local government.
B. Having signed a memorandum of understanding with the local government of Local Asset Management Zone and obtained certificates of stationing at Local Asset Management Zone issued by the local government.
(2) Service Clients: Limited to high-asset customers.
(3) Business Items for the Trial:
A. Offshore banking business items for trial and exemptive items (limited to offshore high-asset customers):
i. Wealth management business items:
1.Offshore banking units (“OBU”) acts as the agency of foreign currency bonds transaction business or commission agency, brokerage and agency business of other foreign currency financial products transaction approved by the competent authority; and may sell and buy foreign currency bonds in the bank’s own name with consent from the customer.
2.OBU acts as securities introducing broker, opens omnibus account in domestic securities firms in the bank’s own name, and on behalf of the customer, places orders to such securities firms for foreign securities other than those mentioned above.
3.OBU may sell foreign currency funds and private equity funds by the agency of payment and collection services after signing contracts with the issuing institutions of foreign currency funds and private equity funds on over-the-counter market; and may subscribe in the bank’s own name with consent from the customer.
ii. To provide policy financing loan and premium financing loan by using the insurance contracts of high-asset customers as collaterals (“policy financing loan and premium financing loan business”).
iii. To provide loan by using the financial asset portfolios of the high-asset customers as collateral where the scope of collaterals are limited to the financial asset held by the customer (“Lombardlombard lending business”).
iv. Business related to family office.
v. OBU, Offshore Securities Units (“OSU”) and Offshore Insurance Units (“OIU”) to conduct joint-marketing, joint-promotion or joint account opening operations (“Lombardjoint marketing business”).
vi. The selling procedure for high-asset customers to purchase unlisted financial products by trust platform is not subject to the review operations requirements before onboarding the financial products under the “Regulations Governing the Scope of Business, Restrictions on Transfer of Beneficiary Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust Enterprises”. (“exemption of selling procedures for purchasing unlisted financial products”)
vii. The maximum loan-to-value ratio of collateral loan business where beneficial rights of self-benefit specific monetary trust being the collaterals is not limited to 50% and re-financing is permissible.
viii. Other offshore banking business items for trial.
B. High-asset business items for trial and exemptive items:
i. Banks sell securities investment trust funds and offshore funds with the nature of securities investment trust funds by the agency of payment and collection services; and may subscribe in the bank’s own name with consent from the customer.
ii. Banks sell offshore funds without the nature of securities investment trust funds (“Non-SIT Funds”) by the agency of payment and collection services after signing contracts with the foreign asset management institution or its designated institutions; and may subscribe in the bank’s own name with consent from the customer.
iii. Banks sell private equity funds where the securities investment trust enterprise (“SITE”) manages or its subsidiary acts as the general partner by trust business or agency of payment and collection services after signing contract with the SITE; and may subscribe in the bank’s own name with consent from the customer.
iv. Banks sell Non-SIT Funds introduced by the SITEs or securities investment consulting enterprises by trust business or agency of payment and collection services after signing contracts with them; and may subscribe in the bank’s own name with consent from the customer.
v. Policy financing loan and premium financing loan business.
vi. oardLombard lending business, provided that when a customer uses NTD financial assets as collateral for a foreign currency loan, the proceeds may not be converted into NTD.
vii. Business related to family office.
viii. Exemption of selling procedures for purchasing unlisted financial products.
ix. The maximum loan-to-value ratio of collateral loan business where beneficial rights of self-benefit specific monetary trust being the collaterals is not limited to 50% and re-financing is permissible.
x. Other high-asset trial business items for trial.
C. Cross-border financial services business items for trial applicable to domestic banks (limited to being handled by personnel at the designated zone):
i. Recommending to or soliciting financial products and services of overseas branches from offshore high-asset customers.
ii. Assisting overseas branches to confirm delivery of information related to bank account opening, as well as verify and witness signature, etc. for offshore high-asset customers.
iii. Handling confirmation of delivering wealth management transaction documents or transmission of transaction instruction for customers of overseas branches.
iv. During their stay in Taiwan, personnel from overseas branches may provide the services described in C.i to iii above to offshore high-asset customers, accompanied by staff from the designated zone.
(4) The Operation Directions further sets forth the required documents for application and relevant provisions for money laundering and terrorist financing risk assessments when launching new products or services or engaging in new types of business.
2.Insurance Industry
(1) Qualifications:
A. Being approved by the FSC to conduct wealth management business or offshore insurance business and having conducted such business.
B. Having signed a memorandum of understanding with the local government of Local Asset Management Zone and obtained certificates of stationing at Local Asset Management Zone issued by the local government.
((2) Service Clients: Limited to high-asset customer (as per “Directions for Life Insurance Industry to Conduct Wealth Management Business”) and OIU customers only.
(3) Business Items for the Trial:
A. Wealth management business:
i. Conducting multi-payment health insurance in foreign currencies.
ii. Conducting insurance products not subject to minimum ratio requirements for death benefits of life insurance products versus policy value reserves (policy account value).
B. Offshore insurance business: Joint marketing business.
(4) The Operation Directions further sets forth the required documents for application and relevant provisions for money laundering and terrorist financing risk assessments when launching new products or services or engaging in new types of business.
3.Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises
(1) Qualifications:
A. Applicants for the business items for trial of external asset management consulting services shall obtain the FSC’s approval to operate discretionary investment mandate business in accordance with Article 6 of the “Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises” and shall apply for change of its operational license pursuant to Article 7 of the same Regulations.
B. Applicants for the business items for trial involving multi-channel distribution of Non-SIT Funds shall meet the qualification requirements for master agents as stipulated in Article 9 of the “Regulations Governing Offshore Funds.”
C. Having signed a memorandum of understanding with the local government of Local Asset Management Zone and obtained certificates of stationing at Local Asset Management Zone issued by the local government.
(2) Service Clients: Limited to high-asset customer (as per the requirements set forth in Point 1 of FSC Ruling No. Jin-Guan-Zheng-Tou-Zhi-1130384919) only.
(3) Business Items for the Trial:
A. External asset management consulting business items for trial:
i. Provide the following services in relation to securities, offshore funds not approved by or registered effectively with the FSC (including hedge funds), private equity funds, and other assets (such as real estate investments, gold, and minerals):
1.Accept client mandates to provide investment consulting services.
2.Accept client mandates to provide investment analysis and recommendations, and execute transactions on their behalf.
3.Accept client mandates to provide investment consulting services with decision-making power.
4.Accept client mandates to provide investment consulting services with decision-making power and execute transactions on their behalf.
ii. Provide consulting services in areas such as taxation, risk management, and insurance.
B. Multi-channel distribution of Non-SIT Funds (through an engagement agreement with a bank or securities firm located in Local Asset Management Zone, where the bank or securities firm within such designated zone may sell Non-SIT Funds to high-asset customers).
(4) The Operation Directions further sets forth the required documents for application and relevant provisions for money laundering and terrorist financing risk assessments when launching new products or services or engaging in new types of business.
4.Securities Firms
(1) Qualifications:
A. Being approved by the FSC to conduct OSU business and having conducted such business; and
B. Having signed a memorandum of understanding with the local government of Local Asset Management Zone and obtained certificates of stationing at Local Asset Management Zone issued by the local government.
(2) Service Clients: Limited to offshore clients and high-asset customers only.
(3) Business Items for the Trial:
A. Offshore securities business items for trial:
i. OSU operates as an agent for the purchase and sale of foreign bonds, where the purchaser may be an offshore client, and there are no specific restrictions on the foreign bonds.
ii. Foreign currency-denominated structured notes issued by overseas subsidiaries may be sold through OSU to offshore clients, domestic high-asset customers, and domestic professional investors.
iii. OSU may accept mandates from foreign private equity fund institutions to introduce offshore clients and domestic high-asset customers to invest in foreign currency-denominated private equity funds.
iv. OSU may sell Non-SIT Funds to offshore clients and domestic high-asset customers.
v. Exemption of selling procedures for purchasing unlisted financial products.
vi. The maximum loan-to-value ratio of collateral loan business where beneficial rights of self-benefit specific monetary trust being the collaterals is not limited to 50% and re-financing is permissible, provided that the loaned funds may not be converted into New Taiwan Dollars, nor may they be used to buy foreign currency for repayment in New Taiwan Dollars.
vii. Joint marketing business.
viii. Other offshore securities business items for trial.
B. High-asset business items for trial:
i. Entering into agreements with SITEs and securities investment consulting enterprises to sell offshore funds with Non-SIT Funds introduced by them; and may, with clients’ consent, carry out subscription procedures in the name of the securities firm.
ii. Exemption of selling procedures for purchasing unlisted financial products.
iii. The maximum loan-to-value ratio of collateral loan business in New Taiwan dollars where beneficial rights of self-benefit specific monetary trust being the collaterals is not limited to 50% and re-financing is permissible.
iv. Securities firms that have obtained approval from the FSC to operate securities investment consulting services and discretionary investment mandate business in accordance with the relevant regulations of Standards Governing the Establishment of Securities Investment Consulting Enterprises, and have had their operational licenses changed, may apply for external asset management consulting business items for trial.
C. Cross-border financial services business items for trial:
i. Recommending to or soliciting financial products and services of its overseas subsidiaries from offshore high-asset customers.
ii. During the stay of its personnel of overseas subsidiaries in Taiwan, such personnel may provide the services described in C.i above to offshore high-asset customers, with the accompaniment by staffs from the designated zone.
(4) The Operation Directions further sets forth the required documents for application and relevant provisions for money laundering and terrorist financing risk assessments when launching new products or services or engaging in new types of business.
Stacy/Jeffrey
