The Financial Supervisory Commission (FSC) yesterday announced new regulations on beneficiary disclosures in a bid to help financial institutions combat money laundering.
The move came after the Asia/Pacific Group on Money Laundering (APG) last month said that Taiwan had made progress in combating money laundering, but shortcomings remain, such as insufficient disclosures of beneficiaries.
Compared with other nations’ regulations, which can track down many layers and affiliates, Taiwan’s definition of beneficiaries as shareholders with a 25 percent stake is not enough, the group said.
“The existing regulations are too loose, especially in dealing with know-your-customer [KYC] reviews,” Banking Bureau Deputy Director Wang Li-chun (王立群) told a meeting.
As other nations define beneficiaries as shareholders with a 10 percent stake, the commission said it would ask financial institutions to do the same and review shareholders who hold more than a 10 percent stake in companies they do business with, Wang said.
The new rule should be applied to all corporate clients regardless of whether they are listed, the commission said, adding that if the clients refuse to disclose their beneficiaries, the financial institutions could decline to help them open accounts.
As many companies in Taiwan have a fragmented ownership structure, the commission would also ask financial institutions to track down natural persons with control in the board rooms or management to see if there are shareholders with a more than 10 percent stake among their corporate clients, it said.
The commission would release a new guidance on the disclosure of beneficiaries for financial institutions in the first quarter of next year, Wang said.
Financial institutions that fail to comply with the new guidance would be deemed as having poor KYC performance and could be fined, Wang said.
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