Article Content
Chapter 5. Supplemental Provisions.
| Article 38 | Where an internal audit conducted under the direction of the chief auditor has any of the following situations, the competent authority may, depending on the severity of the case, demand rectification by ordering the bank to remedy the situation within a prescribed time period or to discharge its chief auditor:
1. Factual evidence shows that the chief auditor has engaged in improper lending practice, grossly violated the guidelines for extension of credit or has improper financial relationship with customer.
2. Factual evidence shows that the chief auditor abuses his/her authority to engage in illicit activity or profit self or others, or takes advantage of his/her position to damage the interests of the bank or others.
3. Disclosing or delivering information or making public the whole or any part of the financial examination report to people unrelated to the execution of audit work without the approval of the competent authority.
4. Failing to notify the competent authority regarding major fraud inside the bank due to poor management.
5. Failing to disclose in the internal audit report serious deficiencies in bank’s finance or business.
6. Issuing an untruthful audit report on findings in internal audit.
7. Failing to discover serious deficiencies in the finance or business of the bank due to the inadequate assignment or incompetence of internal auditor.
8. Failing to follow the instructions of competent authority in handling the audit work or providing relevant information.
9. Engaging in other conduct that impairs the reputation or interest of the bank. |
| Article 39 | A bank shall specify punishment to be meted out to manager and relevant personnel for violating the Rules herein or the internal control rules of the bank.
The bank should constantly examine the incident of violation of Article 16 herein by internal auditors, and any transgression is discovered, reassign the violator to another position within one month from the date of discovery.
The bank should check whether its internal auditors comply with the provisions in Article 20 and Article 21 when filing the basic information of internal auditors in accordance with Article 34 herein, and if non-compliance is found, demand remediation in two months or else immediately reassign the non-complying auditor to another position. |
| Article 40 | The competent authority will set forth formats specified in the Rules herein. |
| Article 41 | The branch of a foreign bank in Taiwan shall carry out internal control and audit in compliance with the Rules herein. But if the internal control and audit system of a foreign bank branch is set out according to the relevant system adopted by its head office which is at least at par with the provisions of the Rules herein, the foreign bank branch may submit a statement signed by its responsible person to the competent authority which describes in detail the internal control and audit system of its head office and cross reference with the system adopted in Taiwan, and carry out internal control and audit according to the system adopted by its head office.
A foreign bank that has already set up a branch in Taiwan when the amended Rules herein were promulgated on June 14, 2005 shall bring its existing internal control and audit system in compliance with the Rules herein or submit a statement provided in the preceding paragraph to the competent authority within six months following the promulgation of the Rules herein.
If the head office of a foreign bank branch makes changes to its internal control and audit system that apply to the branch in Taiwan, the foreign bank branch shall promptly submit a cross-reference statement signed by its responsible person to the competent authority.
If the branch of a foreign bank in Taiwan violates the internal control and audit system accepted by the competent authority in accordance with three preceding paragraphs hereof, it shall be deemed as violating the Rules herein. |
| Article 42 | The Rules herein shall be in force on the date of promulgation. |