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Financial Supervisory Commission Order
Issuance Date: March 14, 2022
Issuance No.: Gin-Guan-Yin-Wai No. 11102705671
I. This Order is processed in accordance with Article 4, Paragraph 1, Subparagraphs 2 and 11 of the Offshore Banking Act.
II. Where an offshore banking unit (OBU) operates foreign-currency loan businesses for entities within the territory of the Republic of China ("institution"), the entities may open accounts for the purpose of handling loan-related receipts and disbursement ("loan accounts") at the OBU.
III. The operations of the loan accounts must meet the following principles:
(I)Transaction counterparties of the loan accounts shall be restricted to accounts specified in Subparagraph 2 and accounts in OBU, offshore branches of domestic banks, or offshore financial institutions.
(II)The transaction counterparties shall be restricted to the same domestic juridical persons’ foreign-currency accounts opened in authorized banks specified in the Regulations Governing Foreign Exchange Business of Banking Enterprises (hereinafter referred to as the "Domestic Banking Units (DBU) ") and meet the following conditions:
1. Funds may be remitted from the DBU foreign currency accounts into the loan accounts for the following payments:
(1) Principal and interest repayment for loans;
(2) Related expenses derived from loans;
(3) Guarantee deposits for indirect credit facilities such as trade finance or guarantees;
(4) Guarantee deposits for loan-related foreign currency forward transactions and foreign exchange swaps for hedging purposes.
2. Funds may be remitted from the loan accounts to the DBU foreign currency accounts:
(1) Settlement of the balance after the funds are remitted from the DBU foreign currency accounts for payment of funds in the preceding subparagraph;
(2) Balance in the accounts after the close-out of the loan accounts.
(III) The funds transfers are restricted to transactions between foreign currencies and the funds may not be exchanged to New Taiwan Dollar (NTD).
IV. The loan accounts shall only be used within the scope of the following loan-related receipts and disbursements:
(I) Disbursements for loans
(II) Principal and interest repayment for loans
(III) Capital expenditures
(IV) Revolving funds for general operations
(V) Trade finance which includes self-liquidating trade financing payments derived from trading requirements such as import/export bills negotiation, issuance of letters of credit, purchase of letters of credit receivable, purchase of accounts receivable, accounts payable, accepted export bill discounts, material purchase guarantees, export loans, import financing, accepted bill receivables.
(VI) Foreign currency exchange and spot transactions between foreign currencies for the purpose of loan-related receipts and disbursement, and foreign currency forward transactions and foreign exchange swaps for hedging purposes with an operating period of no more than 180 days
(VII) Receipts and disbursements for goods and services
(VIII) Direct investments in offshore subsidiaries, etc. excluding investments in financial products
V. Offshore banking units shall control and manage the loan accounts in accordance with the following mechanisms, implement risk management, anti-money laundering, internal audit and internal control system, and establish and faithfully implement internal operating procedures:
(I) The opening, the scope of subsequent use of the accounts, and close-out of the accounts must be consistent with the purpose of the institution's loan, related uses of funds, and patterns the demand for international fund allocation derived from such use. In addition, the first funds in the accounts must be the inward transfer of loan funds. However, if the loan is an indirect loan such as trade finance or guarantee, such accounts are not bound by the restriction that requires the first fund remitted to the accounts to be the loan fund.
(II) Continuous monitoring of the accounts and transactions shall be based on the operation model and allocation requirements of related receipts and disbursements in accordance with the bank's post-loan management and AML/CFT regulations.
VI. The OBU shall regularly report information related to the business to the Central Bank of the Republic of China (Taiwan) in accordance with the format, contents, and frequency specified by the Central Bank.
VII. This Order shall be effective from the date of promulgation. The Gin-Guan-Yin-Kong No. 10902733851 order shall be repeal immediately. |