Taiwan Bans Four Foreign Banks for Breaching FX Regulations

The Central Bank of Taiwan has penalized four foreign banks for assisting 8 major grain companies in breaching the FX Regulations. The Dutch bank, Deutsche Bank, is also permanently banned. They can no longer trade TWD deliverables and non-deliverables. However, the other banks like ING, ANZ, and Citi have been given less strict punishments. 

Deutsche Bank’s branch in Taipei has been suspended to trade FX derivatives for two years along with the permanent ban of the trading of TWD. ING and ANZ banks’ offices in Taipei are also banned for trading deliverable and non-deliverable TWD but only for nine months. However, the Citi group’s branch in Taipei is also suspended from deliverable and non-deliverable trading for two months.

This is done when the local currency reached its highest against the US dollars in more than three years and the Central Bank carried out an investigation on the speculation in the FX markets. 

The Central Bank has been concerned about the 8-grain companies that have been involved in the currency speculation through deliverable forward assisted by the foreign banks.

“The FX activities of the grain merchants were carried out under the guise of routine currency transactions, which were not in sync with their actual business needs. The lenders that were penalised failed to fulfill KYC obligations to certify clients’ actual needs.” Said the Central Bank.

Other than these four lenders being penalized, JPMorgan Chase and the Standard Chartered Bank was also included in the probe. They were not penalized because they had stopped the practice long before. 

The Central Bank had already warned the banks that they can be penalized. The bank also announced that it is improving its rules that give local companies permission for FX transactions, regulate the amount of currency the overseas companies can accrue, and limit remittances from foreign loans taken by different companies.