Taiwan Fintech Compliance

Framework

IRON LAW: In Fintech, Regulation Comes BEFORE Product

Unlike most tech products where you can launch and iterate, financial
services in Taiwan require LICENSING FIRST. Operating without the proper
license is a criminal offense (not just a fine). Determine your regulatory
category and licensing requirements BEFORE writing code.

FSC Regulatory Framework

金融監督管理委員會 (FSC) oversees all financial services in Taiwan:

| Category | Governing Law | License Required | FSC Division | |----------|-------------|-----------------|-------------| | Electronic payment | 電子支付機構管理條例 | 電子支付機構許可 | Banking Bureau | | Third-party payment | 第三方支付服務業管理辦法 | Registration (lighter) | Banking Bureau | | P2P lending | 金融科技發展與創新實驗條例 (sandbox) or crowd-funding rules | Case-by-case | Securities Bureau | | Robo-advisory | 證券投資信託及顧問法 | Investment advisory license | Securities Bureau | | Insurance tech | 保險法 | Insurance broker/agent license | Insurance Bureau | | VASP (crypto) | 虛擬資產服務提供者管理辦法 (2024) | VASP registration + AML compliance | Securities Bureau | | Open banking | 金融機構間資料共享指引 | API partnership with banks | Banking Bureau |

Electronic Payment vs Third-Party Payment

| Feature | Electronic Payment (電子支付) | Third-Party Payment (第三方支付) | |---------|---------------------------|-------------------------------| | Stored value | Yes (e-wallet) | No (pass-through only) | | P2P transfer | Yes | No | | Capital requirement | NT$500M+ | NT$5M | | License | FSC approval (12-18 months) | Registration (1-3 months) | | Examples | LINE Pay Money, JKoPay, icash Pay | 綠界 ECPay, 藍新 NewebPay |

VASP (Crypto) Regulations (2024+)

| Requirement | Detail | |------------|--------| | Registration | Must register with FSC as VASP | | AML/CFT | Full compliance with 洗錢防制法 | | KYC | Identity verification for all users | | Custody | Customer asset segregation required | | Marketing | Restrictions on advertising (no promises of returns) | | Reporting | Suspicious transaction reports (STR) to 調查局 |

AML/KYC Requirements (All Financial Services)

| KYC Level | When Required | Data Collected | |-----------|-------------|---------------| | Simplified | Low-risk, small transactions | Name, ID number, DOB | | Standard | Account opening, most transactions | + Address, occupation, source of funds | | Enhanced | High-risk customers, PEPs, large transactions | + Detailed source of wealth, ongoing monitoring |

Ongoing obligations:

• Transaction monitoring (unusual patterns)
• Suspicious Transaction Reports (STR) to 法務部調查局
• Sanctions screening (OFAC, UN, EU lists)
• Record keeping: 5+ years after account closure

Regulatory Sandbox (金融科技創新實驗)

| Aspect | Detail | |--------|--------| | Purpose | Test innovative financial services without full licensing | | Duration | Up to 18 months (extendable to 36) | | Application | Submit to FSC with: innovation description, consumer protection plan, risk assessment | | Approval time | 60 business days | | Scope limitation | Must define user count, transaction limits, geographic scope | | Exit plan | Path to full license or orderly shutdown |

Open Banking (Three Phases)

| Phase | Data Shared | Status | |-------|-----------|--------| | Phase 1 | Product information (rates, fees) | Launched 2019 | | Phase 2 | Customer information (with consent) | Launched 2021 | | Phase 3 | Transaction initiation (payment, transfer) | In development |

Output Format

markdown
# Fintech Compliance Assessment: {Product}

## Product Classification
- Service type: {payment / lending / advisory / crypto / insurance}
- Regulatory category: {electronic payment / third-party / VASP / etc.}
- License required: {specific license name}

## Licensing Pathway
| Step | Action | Timeline | Cost |
|------|--------|----------|------|
| 1 | {step} | {months} | NT${X} |

## AML/KYC Requirements
- KYC level: {simplified / standard / enhanced}
- Transaction monitoring: {required / not required}
- STR reporting: {required / not required}

## Key Risks
| Risk | Impact | Mitigation |
|------|--------|-----------|
| {regulatory risk} | H/M/L | {action} |

## Recommendation
- Proceed with licensing / Use sandbox / Restructure product to avoid licensing

Gotchas

• Third-party vs electronic payment: The distinction is stored value. If your app holds customer money (e-wallet), you need the much heavier electronic payment license (NT$500M capital). If you just process payments (pass money from buyer to seller), third-party registration is sufficient.
• Sandbox is not a shortcut: The sandbox exempts you from licensing temporarily, but you must still comply with AML, consumer protection, and data privacy. And you still need to get a full license to commercialize.
• VASP regulation is new and evolving: The 2024 VASP rules are Taiwan's first comprehensive crypto regulation. Expect amendments and additional guidance. Build compliance infrastructure that's adaptable.
• Foreign fintech entering Taiwan: Foreign companies must establish a Taiwan entity and obtain Taiwan-specific licenses. A license in another jurisdiction does not transfer.
• This is educational guidance, not legal/regulatory advice: Fintech regulation is complex and penalties for non-compliance include criminal charges. Engage a regulatory affairs lawyer specializing in Taiwan financial services.

References

• For FSC licensing application guides, see references/fsc-licensing.md
• For AML/KYC implementation checklist, see references/aml-kyc-checklist.md