Taiwan skillfully leveraged innovative technologies in managing the COVID-19 pandemic, which led to relatively few cases, spared the nation from economic devastation and drove further digital transformation. GDP expanded by 2.98% in 2020, making Taiwan Asia’s top-performing economy of the year,1 and economic growth is forecasted to surge by 5.46% in 2021.2 The Institute for Management Development (IMD) ranked wealthy and fintech-friendly Taiwan as the world’s 8th most competitive economy in its 2021 World Competitiveness Yearbook.
In August 2020, President Tsai Ing-wen laid out an ambitious goal for the Taiwanese economy. “We are going to make Taiwan the number one center in Asia for capital movement and establish ourselves as a wealth management center,” said Tsai. “This means loosening rules and providing more diversified financial products and services.”3 Also in August 2020, the Financial Supervisory Commission released its fintech development roadmap, which will facilitate data sharing amongst financial holding companies’ subsidiaries.4 Indeed, the accelerated adoption of disruptive technologies like open data and AI will be key in revolutionizing the Taiwanese financial and banking sectors, whose services and products are increasingly offered by competitors in fintech.
Taiwan has already made great strides towards digital transformation in finance and banking. The September 2020 Bill on the Development of Artificial Intelligence establishes a regulatory framework to promote the safe use of AI in the economy, which could be key in promoting technologies that support remote onboarding and biometric authentication. The city of Taipei, per a February 2021 white paper on digital transformation, also plans to spearhead the adoption of innovation in the economy. The paper outlines fifteen action plans to boost the development of digital infrastructure, a “stay-at-home economy,” contactless services and digital talent, hinging on key initiatives like the establishment of a big data center and the promotion of digital payments.
Taiwan’s 2021 digital platform focuses on bolstering the national cybersecurity framework, reconciling the national data protection framework with the EU’s GDPR, regulating virtual currencies and promoting digital transformation. Its agenda strikes an expert balance in fostering digitalization while also mitigating the risks that come with it, like increased data protection concerns, sophisticated cyberthreats and AML/CFT risks in virtual currencies. In June 2021, the central bank revealed that it has been investigating the possible introduction of a central bank digital currency, but that it does not have a timeframe for its development.5
Financial Regulatory Authorities
The Central Bank of the Republic of China (Taiwan) is the central bank of Taiwan. The bank issues the country’s currency and develops monetary and payment system policies. The bank operates through several departments, including a Department of Banking.
The Financial Supervisory Commission (FSC) is the independent government agency supervising and regulating the securities markets, as well as the banking and insurance sectors.
Policy, Laws and Regulations
New Data Sharing Guidelines for FIs, December 2021
FSC notes that data may be shared between FIs, subject to consumer consent, “if it can enhance customer convenience, improve operations, or facilitate cooperative business arrangements or partnerships.”
Data may be shared among the business units and subsidiaries of financial holding companies and financial groups for risk identification and risk control, provided that customer consent is obtained and the rights and interests of customers are protected. For this purpose, such organizations may establish a centralized database for maintaining KYC records and performing AML/CTF risk assessments.
Data sharing can also occur between FIs “if it can enhance customer convenience, improve operations, or facilitate cooperative business arrangements or partnerships”. Date elements include “KYC data, transaction records, account information and IP addresses for use in precision marketing – subject to customer consent and the establishment of time limits on data sharing arrangements.”
Draft Regulations on AML Measures Regarding Virtual Currencies, 25 May 2021
The Taiwanese Financial Supervision and Administration Commission issued its draft Measures for Preventing Money Laundering and Combating Capital Terrorism on Virtual Currency Platforms and Transaction Business Undertakings, which outlines 18 regulations based on recommendations from the Financial Action Task Force (FATF). The regulations require operators of virtual currency platforms to conduct customer due diligence, continuous review of customer identity and continuous monitoring of customer transactions, as well as report on suspicious activities and adopt the FATF’s “Travel Rule.” Per the travel rule—which seeks to crack down on the exploitation of crypto’s anonymity for the purposes of AML/CFT—originators and beneficiaries of digital funds transfers must share identification information, including name and account number. Other key requirements address the declaration of currency transactions above a certain amount, the implementation content of the internal control and audit system, preservation of the business record and the notification method and procedure.
The Financial Supervisory Commission has been especially eager to impose transaction reporting requirements. On 20 April 2021, the authority announced that, effective 01 July 2021, all cryptocurrency exchanges must report cash transactions of over NT $500,000 (approximately USD $17,770) or its equivalent in a foreign currency.6
National Cybersecurity Strategy, 04 May 2021
President Tsai Ing-wen announced at a CYBERSEC 2021 event that the government would soon introduce a “Cybersecurity is National Security Strategy 2.0,” upgraded from a first version launched in 2018. The strategy will establish a ministry of digital development and a department for cybersecurity in an aim to safeguard critical infrastructure and core databases, implement new regulations and foster talent.7 The spring of 2021 saw a spate of high-profile cyberattacks against Taiwanese companies, which have increasingly moved to incorporate cybersecurity in their business models. Cyberattacks against Taiwanese government agencies have especially risen, and the Taiwanese Ministry of Foreign Affairs was attacked forty times more in 2020 than in 2018.8
Order on the Operation of the MyData Platform, 14 April 2021
The executive order on the promulgation of Operation Directions Governing the Interconnection of MyData was published in the official gazette, thus officially launching the MyData platform, in partnership with fifteen Taiwanese banks. The MyData platform, which has been in trial operation since July 2020, gives individuals control over their personal data by allowing them to download personalized data and consent to its transmission to third parties. Banks have been utilizing the platform to offer financial services like online credit card applications, online loans and remote deposit account openings. The order also provides an overview of operation of the MyData platform, alongside requirements for entities seeking to function as a data or service provider on the platform.
Amendment to Act Governing Electronic Payment Institutions, 27 January 2021
A presidential order promulgating the amendment to the Act Governing Electronic Payment Institutions was published in the official gazette. The amended act clarifies a previously fragmented payments framework, facilitates the development of electronic and mobile payments, boosts convenience in payments, promotes financial inclusion and adopts a risk-based approach in regulating the electronic and mobile payments industries. In a move towards encouraging competition, development of fintech companies and innovations in payments, the amended act widens the scope of businesses that qualify as electronic payment institutions (EPI), including secondary businesses that are complementary to EPIs.9 The amended act also enables inter-EPI fund settlements, without the previous requirement of bank involvement, thus encouraging EPIs to expand their businesses. With FSC approval, EPIs may establish foreign branches and conduct cross-border transactions. EPIs may also open accounts with non-bank institutions, like credit departments of cooperatives and associations, in a move to encourage financial inclusion in underserved communities.
Draft Amendments to the Personal Data Protection Act, 16 April 2021
The bill Draft Amendments to Articles 2 and 3 of the Personal Data Protection Act was submitted to the Taiwanese Legislative Yuan. The bill seeks to align the Taiwanese data protection framework more closely with the EU’s GDPR. It amends issues on the right of access by data subjects and includes “online identifiers” in the statutory definition of personal data. The amendments follow the introduction of the Digital Rights and Personal Data Protection Commission Organisation bill, which aims to bring Taiwan’s data protection framework in adherence with the GDPR such that an adequacy regime may be established for the cross-border transfer of personal data between Taiwan and the EU. The Digital Rights and Personal Data Protection Commission Organisation bill would also establish a national data protection authority.
1. Lee, Yen Nee. “Taiwan’s economy outgrows China’s for the first time in 30 years, as chips demand soars.” CNBC, 01 February 2021. https://www.cnbc.com/2021/02/01/taiwan-economy-outgrows-china-first-time-in-decades-as-chips-demand-rises.html.
2. Taiwan raises 2021 economic growth forecast to 5.46%.” Reuters, 04 June 2021. https://www.reuters.com/article/taiwan-economy-gdp-idUST8N2GJ025.
3. On, Angelica Oung. “Updating Taiwan’s Banking System with Fintech.” 24 March, 2021. https://topics.amcham.com.tw/2021/03/taiwan-banking-system-fintech/.
4. Kao, Shih-ching. FSC introduces fintech roadmap. Taipei Times, 29 August 2020. https://www.taipeitimes.com/News/biz/archives/2020/08/29/2003742443.
5. Yang, Sophia. “Taiwan Central Bank's 'govcoin' not ready for rollout yet.” Taiwan News, 18 June 2021. https://www.taiwannews.com.tw/en/news/4226514.
6. Kao, Shih-ching. “New cryptocurrency rules to take effect on July 1.” Taipei Times, 21 April 2021. https://www.taipeitimes.com/News/biz/archives/2021/04/21/2003756045.
7. Chang, Ya-chun. “Taiwan's president announces new cybersecurity unit.” 04 May 2021. https://www.taiwannews.com.tw/en/news/4194694.
8. Lange, Libby and Doowan Lee. “Disinformation, Annexation, & Deterrence: Why the CCP Is More Likely to Subvert Taiwan Than Invade.” Lawfare, 22 June 2021. https://www.lawfareblog.com/disinformation-annexation-deterrence-why-ccp-more-likely-subvert-taiwan-invade-0.
9. “Good News For Global Fintechs: Proposed Amendment To Taiwan's Act Governing Electronic Payment Institutions Aims To Consolidate The Development Of Electronic Money And Payment Industries And Streamline The Provision Of Payments.” The National Law Review, 18 November 2020. https://www.natlawreview.com/article/good-news-global-fintechs-proposed-amendment-to-taiwan-s-act-governing-electronic.
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Last updated: November 2021