The Committee appreciates the government’s attention to our recommendations in the 2024 Taiwan White Paper and its meaningful steps toward implementation. We are pleased to note progress on our suggestion to allow financial institutions to store accounting-related documents electronically, as well as efforts to ease ID verification requirements for securities-dealing counterparties.

Additionally, discussions have been held with regulators regarding our recommendation to revise password management regulations to enhance security and flexibility in the banking industry. While this issue remains under discussion and has not yet been fully resolved, it has not been reiterated in this year’s recommendations to allow focus on more urgent matters.

In this year’s White Paper, we ask the government to implement regulatory reforms that enhance financial sector flexibility, promote cross-border banking cooperation, expand investment opportunities, and align Taiwan’s financial regulations with global best practices to strengthen market competitiveness and risk management.

We look forward to continued liberalization that will attract more foreign institutions to participate in the market and bring further business opportunities to Taiwan from neighboring financial markets such as Hong Kong and Singapore. These reforms will strengthen Taiwan’s financial sector, attract talent, and foster industry growth.

Suggestion 1: Relax the application scope of the operating rules for security measures of financial institutions using electronic signature mechanisms.

The Ministry of Digital Affairs (MODA) issued an interpretation regarding electronic signature technology under the Electronic Signature Act (ESA) on December 2, 2022. Incorporating recommendations from the European Chamber of Commerce in Taiwan, the interpretation aims to support financial digitalization and paperless operations.

Following guidance from the Banking Bureau, the Bankers Association of the Republic of China (BAROC) later established operating rules for security measures of financial institutions using electronic signature mechanisms (also called security control guidelines) in March 2024. These rules enable banks to offer customers secure online signing of electronic documents, supporting growth of the digital economy in alignment with international security standards.

Following establishment of the security control guidelines, MODA revised the ESA, which was passed by the Legislative Yuan and promulgated on May 15, 2024. MODA later issued accompanying enforcement rules on November 14, 2024, creating a comprehensive legal framework for electronic signatures.

However, inconsistencies remain between the BAROC-issued security control guidelines and the ESA. For example, Articles 2 and 5 of the security control guidelines allow clients to use an e-signature platform for application instructions, provided that the signature private key is stored by the customer, the bank, or a trusted third-party platform. However, the articles limit the scope of e-signatures to electronic transfers and transaction instructions, as defined in the guidelines for security measures of financial institutions for electronic banking services. This restriction conflicts with the ESA’s intent to enable broader use of e-signatures across financial transactions.

In addition, Article 4 of the ESA states that if electronic records and signatures meet legal requirements and are functionally equivalent to a physical document, their validity cannot be denied solely due to their electronic format. Similarly, Article 5 affirms that electronic records and signatures satisfy legal documentation requirements as long as information remains intact and accessible. It also provides that counterparties must be given the opportunity to object to electronic documentation, but if no objection is raised, consent is presumed.

By contrast, under the security control guidelines, banks must obtain a customer’s written consent to use electronic signatures for online document signing and appoint electronic document signatories or authorized personnel. This consent must be verified using the company’s and the responsible person’s seal. Additionally, clients must specify the scope of documents they will sign electronically when entering into an agreement to use an e-signature platform.

Beyond the banking industry, digital technology has been widely adopted across various sectors, particularly by large multinational corporations. Many of these companies routinely use electronic signatures for financial and commercial transactions. In reviewing the security control guidelines, it is important to consider this broader industry practice and evaluate whether existing requirements, such as obtaining written customer consent for online document signing, may be streamlined to better reflect the evolving digital landscape.

Banks that provide electronic signature services are required to conduct risk assessments and establish application qualifications and control mechanisms. These measures should be sufficient to verify customer intent. Furthermore, the security control guidelines distinguish between banks handling only application instructions and those handling both application and transaction instructions based on key holding and storage mechanisms.

To reduce regulatory conflicts and support digital economy development, the Committee recommends allowing banks and customers to determine the permissible scope of electronic signatures through mutual agreement rather than rigid regulatory restrictions. To better align with global practices, the security control guidelines could relax application restrictions for customers using established e-signature platforms or introduce separate regulations for this group.

Future updates should reevaluate technical regulations to determine whether banks using third-party e-signature platforms that meet international standards may also extend services to include transaction instructions. Such revisions would improve regulatory consistency, align Taiwan’s financial sector with global best practices, and provide greater flexibility in adopting secure digital solutions.

Suggestion 2: Allow foreign bank subsidiaries and branches in Taiwan to assist their overseas group members with related cross-border financial services.

When entering new markets, multinational companies often seek out foreign banks in Taiwan to coordinate and facilitate cross-border financial services with their overseas headquarters, branches, or affiliates. Enhancing the ability of Taiwan-based offices to manage and allocate funds more efficiently would improve financial flexibility and global competitiveness.

Under rulings issued by the Financial Supervisory Commission (FSC), including one on March 27, 2014, foreign bank subsidiaries in Taiwan are prohibited from verifying customer identities or providing any assistance that would enable their parent banks, overseas branches, affiliates, or other foreign institutions not approved by the FSC to solicit domestic customers for opening offshore deposit accounts or raising funds within Taiwan.

The regulatory intent of the above-mentioned ruling is to prevent foreign institutions from soliciting customers or raising funds within Taiwan without proper authorization. However, the ruling creates friction with the needs of multinational companies, which seek to establish seamless financial networks to manage their global business. These companies require a structured framework that enables cross-border financial services through their trusted banking partners in Taiwan, in full compliance with regulations.

Foreign banks with subsidiaries or branches in Taiwan should be allowed to better leverage their global networks to support offshore financial service needs. Allowing these banks to fully utilize their global expertise and connectivity would enhance the quality of financial services available in Taiwan. It would also encourage greater engagement, expansion, and long-term development of foreign banks within the domestic market.

We therefore recommend that foreign banks in Taiwan be permitted to assist their overseas affiliates, regional headquarters, and parent banks in providing cross-border financial services to conglomerates, existing multinational customers, and their affiliated entities under appropriate regulatory oversight by the FSC. These services should include introductions, verification and transmission of relevant documents, identity verification, signature witnessing, translation assistance, Know Your Customer and Customer Due Diligence-related services.