Banking and financial activities are highly regulated in Taiwan. Any person (individual and entity) planning to conduct banking and financial activities shall be recognized and licensed for its business and activities in Taiwan. An offshore financial institution that is not licensed in Taiwan cannot operate any banking or financial business or conduct any related activities in Taiwan.
Furthermore, it is the FSCs strict policy that an offshore bank may not dispatch its staff into Taiwan for any banking business activities. Banking business and activities in Taiwan by an offshore bank or its staff is strictly prohibited. The FSC has not provided any exemption for an unlicensed offshore bank in that regard. In addition, cross-border financial services provided in Taiwan by a foreign bank/branch without license or approval in Taiwan is not allowed. In other words, even though an offshore financial institution has set up its Taipei branch, staff from other branches, subsidiaries or affiliates of such offshore financial institution may not conduct any business activities in Taiwan, and the staff from its branch/branches other than its Taipei branch cannot promote or introduce any financial products to clients in Taiwan.
By way of reiteration of this policy, the FSC issued two rulings to the ROC Bankers’ Association in Taiwan, on 27 March 2014 (“27 March Letter”) and on 10 May 2016 ("10 May Letter”), which expressly provide that financial institutions that have no presence in Taiwan shall not provide financial services within the territory of Taiwan, and the local branches or subsidiaries of an offshore bank shall not solicit a client in Taiwan to open an overseas account with the head office, affiliates and/or alliance of such offshore bank or any other financial institution that is not approved by the competent authorities of Taiwan, nor hold funds.
Nevertheless, according to the FSC ruling to the ROC Bankers’ Association in Taiwan on 9 September 2014 (“9 September Letter”), a local bank may provide assistance to its offshore entities with respect to confirmation and delivery of information, contract signing and identity verification in the process of conducting deposit taking, and credit facility business with corporate clients and responsible persons of corporates. With respect to deposit taking, however, a local bank may only provide assistance to offshore branches; with respect to the credit facility business, a local bank may provide assistance to offshore branches and subsidiaries. Further, provision of assistance by offshore subsidiaries of a local bank to such local bank with respect to confirmation and delivery of information, contract signing and identity verification in the process of conducting deposit taking and facility business is currently not prohibited by ROC laws and is subject to the laws of the place where the offshore subsidiary is located. After COVID-19, the FSC promulgated a ruling on 14 January 2021 to extend the 9 September Letter to be applied for the periodical renewal process, not only of corporate clients but also of individual clients, to ease the continuous anti-money laundering due diligence check process for existing clients of both offshore subsidiaries as well as branches.
To provide information/marketing material via remote communication such as telephone or email by an unlicensed foreign institution upon a client’s request is not expressly prohibited. We note that offshore financial institutions may come to Taiwan and meet clients for a courtesy visit or social event. Such activity is not restricted because a courtesy visit or social event in Taiwan is not deemed as a business activity. However, these offshore financial institutions should be cautious not to mention or explain any unapproved or non-licensed offshore products or offshore services to clients in Taiwan, even if they make any request during such a visit or social event.
It is a common market practice in Taiwan for an offshore branch of a multinational financial institution to participate in cross-border syndication for granting straight loans to Taiwan customers or simply in a bilateral loan because lending (including project finance, ship/aircraft finance, real estate finance, acquisition finance and trade finance) by offshore arrangers and/or lenders to onshore borrowers is not prohibited. There are no requirements or prohibitions on the location of the booking centers for such straight loans. Other unlicensed banking services or products provided by an offshore bank or financial institution to Taiwan customers, including but not limited to promotion and solicitation activities in Taiwan, visiting customers in Taiwan or executing contracts and documentation in Taiwan, are restricted. Negotiation and discussion of the terms of any financial products with clients in Taiwan could be deemed to be within the scope of conducting banking or financial business, which is not allowed.