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ANTI-MONEY LAUNDERING GUIDELINES FOR TRUST ENTERPRISES

(the "Guidelines")

As last amended effective from March 28, 2006

  1. These Guidelines are enacted in accordance with Article 6 of the "Anti-Money Laundering Law"to assist in the prevention of money laundering.
  1. Guidelines for Preventing Money Laundering.

(1)Guidelines for Opening Trust Accounts:

  1. To open a trust account (“Account Opening”), the trust enterprise shall use a dual verification method to verify identity, and keep a record of such verification (including individual accounts and other accounts). For individual accounts, the applicant must provide an I.D. card and one other identification document, such as a health insurance card, passport, driver’s license, student card, or household certificate. For accounts other than individual accounts, registration licenses/certificates, official letters or related evidentiary documents shall be provided, and the minutes of a Board of the Directors meeting, Articles of Incorporation or financial reports shall be submitted as well. Tax receipts may not be used as the sole evidentiary document [when opening an account other than an individual account]. The second identification document, other than an I.D. card or registration licenses/certificates, shall be recognizable. If a booklet of a school/organization may prove the customer’s identification, such may be used as the second identification document.

If the customer refuses to provide such identification, the signing of the Account Opening agreement shall be politely rejected or [only] accepted after satisfactory verification.

The trust department may use a single verification method to verify the customer’s identity, and keep a record of such verification; provided, that the bank has previously used a dual verification method to establish the customer’s identity.

2.For Account Opening [where a third party has been authorized to sign on behalf of the customer], the fact and related identification information of such authorization shall be fully verified. If there is any difficulty in verification, the Account Opening shall be politely rejected.

3.If there is any suspicion the customer may be using a fake name, fake account, dummy firm or public institution to Account Opening, the Account Opening shall be politely rejected.

4.If the customer utilizes fraudulent or altered identification documents or if all identification documents provided are copies only, the Account Opening shall be politely rejected.

5.If the documents provided by the customer are questionable or vague, or the customer is unwilling to provide supplemental documents or the documents cannot be verified, the Account Opening shall be politely rejected.

6. If the customer is unusually late in submitting supplemental identification documents, the Account Opening shall be politely rejected.

7.If any unusual incidents occur, and the customer fails to provide proper explanation, the Account Opening shall be politely rejected.

8.The signing of agreements shall otherwise comply with the trust enterprise’s internal procedures.

(2)Guidelines for Confirming Account Opening:

  1. If any question arises with respect to signing under a third-party authorization or after an agreement has been signed, confirmation shall be made by telephone call to, letter to, or by visit to the premises of [the customer].
  1. If the Account Opening agreement is signed by official letter or other mail, an official letter shall be sent by registered mail after the agreement is signed for confirmation purposes.

(3)Guidelines Regarding Transactions After Account Opening:

  1. Verification of customer's identification and maintaining records shall be required for trust funds that exceed a certain threshold.
  1. "Trust funds exceeding a certain threshold" shall mean a single cash receipt or payment (including those recorded as cash receipt or payment voucher, for accounting purposes) exceeding NT$1,000,000 (including foreign currency of equivalent value).
  1. Except as provided in Paragraph 5, below, an electronic report shall be made to the Investigation Bureau of the Ministry of Justice, within five (5) business days of a cash receipt or payment of a signal trust fund that exceeds a certain threshold (see Attachment 1 for the form of such report) [ATTACHMENT NOT TRANSLATED].With appropriate reason and with the consent of the Investigation Bureau of the Ministry of Justice, such report may be made in writing (see Attachment 2 for the form) [ATTACHMENT NOT TRANSLATED].
  1. Special attention shall be paid if any of the following occurs with respect to a customer's account. If there is any suspicious money laundering transaction, in addition to verifying the customer's identity and maintaining the transaction records, a report shall be made to the Investigation Bureau of the Ministry of Justice following the procedures under these Guidelines (regardless of the transaction amount):

(1)The accumulated cash receipts or payments to/from any given trust account during any business day exceed NT$1,000,000 (including foreign currency of equivalent value) and such transactions clearly are inconsistent with the customer's identity or income or are unrelated to the nature of the customer's business;

(2)The accumulated cash receipts or payments to/from any customer at any bank counter exceeds NT$1,000,000 (including foreign currency of equivalent value) and such transactions clearly are inconsistent with the customer's identity or income or are unrelated to the nature of the customer's business;

(3)The total amount of applications to issue trust certificates by any customer at all counters exceeds NT$1,000,000 (including foreign exchange of equivalent value) and the customer is unable to explain the purpose thereof;

(4)Establishing a trust of a significant amount which is unusual and such amount does not conform to the customer's status or income or is unrelated to the nature of the customer's business;

(5)A significant cash deposit into and withdrawal from a dormant trust account which is then transferred immediately;

(6)A trust account that receives many small amounts which are then immediately withdrawn in one significant withdrawal or several withdrawals and such amount obviously does not conform to the status or income of the customer or is unrelated to the nature of the customer's business;

(7)Frequent transfers of significant funds among the customer's related accounts or frequent requests to handle transactions in cash;

(8)Frequent significant deposits into a specific account for a third party or by a third party;

(9)A trust account that frequently receives amounts slightly below the threshold for [money laundering] reporting which is then entrusted by telegraphic transfer to other cities or areas;

(10)Transactions conducted by, or with respect to which the final beneficiary is, a terrorist and/or terrorist organization named by foreign governments in letters forwarded by the Financial Supervisory Commission (“FSC”);or the relevant transaction funds are reasonably suspected of being connected with terrorism, a terrorist organization and/or organization supporting terrorism shall be listed as a suspicious money laundering transaction and shall be reported to the Investigation Bureau of the Ministry and notified to the FSC;

(11)A trust agreement is terminated shortly after signing without appropriate reason;

(12)Trusts of persons who are suspects in major [legal] cases reported in newspapers, magazines, or Internet media outlets; and

(13)Other obviously abnormal transactions.

Trust enterprises that amend their Guidelines for purposes of updating the names of non-cooperating countries or terrorist organizations need not report such amendments to the FSC.

  1. Trust funds exceeding a certain threshold may be excluded from verification of customer's identification, maintaining records and reporting to designated institution requirements if such are Trusts established under laws or contracts with government agencies, state enterprises, institutions exercising government authority (within the applicable authorized scope), other financial institutions, public or private schools, public utility companies, and [investment] funds established by the government in accordance with applicable laws.

If an institution suspects the exemption matters described in the preceding paragraph may involve money laundering, such should be handled in accordance with Article 8 of the Anti-Money Laundering Law.

  1. Internal Anti-Money Laundering Control/Measures.

(1)Procedures to verify customer identity and the method of maintaining evidence of transaction records and the maintenance period thereof:

  1. Institutions shall verify the identity of a customer based on identification documents or passport provided by such customer and record the name, birth date, address, telephone number, transaction account number and transaction amount ID number thereof. However, if the customer's identity can be confirmed as the account holder, such identity verification need not be done.
  1. If an agent carries out the transaction, in addition to the verifications required in the preceding paragraph, the identification documents or passport of such agent should also be provided and the name, address, birth date, telephone number, and ID number of such agent recorded.
  1. The originals of the verification records and transaction documentation shall be kept for five (5) years. The method of recording customer verification procedures shall be at the discretion of this institution (head office) based on the principle that the institution will utilize a uniform process [throughout the institution].

(2)The Customer due diligence process shall include the following:

  1. When an institution establishes a business relationship with a customer or conducts a transaction over a certain amount of money with any temporary customer, or the documents provided by a customer make it hard to verify his/her identify, the customer’s identification shall be verified from documents issued by the government or other recognizable documents, and a record kept thereof;
  1. Institutions are required to pay particular attention to a customer’s identification if his/her account is a discretionary trading account or the trading is conducted by a professional agent or such individual or group has a high risk to harm the institution’s reputation.
  1. Institutions are required to pay special attention to customers who are non-residents and make an effort to understand why such customers choose to open trust accounts in foreign countries.
  1. Institutions are required to monitor customers who are currently engaged in the private wealth management business.
  1. Institutions are required to review customers who have been refused a business relationship by another financial institution.
  1. Where a face-to-face review is not conducted, institutions shall apply equally effective customer identification procedures and have specific and sufficient measures to mitigate risk.
  1. Without violating relevant laws/regulations, if institutions obtain information that the source of the funds is from corruption or public assets or such appears to be the case, the institution shall refuse to accept such funds or terminate the business relationship.

(3)On-going monitoring of accounts and transactions

  1. Institutions shall utilize information systems to identify suspicious transactions.
  1. Institutions shall take special care in monitoring high-risk account holders.
  1. Institutions shall pay special attention to all complicated and unusual transactions of a significant amount or all unusual transactions without an apparent economic or legal purpose. Institutions shall review the customer’s background and the purpose of the above-referenced transaction and establish a written record, accordingly. Such record shall be kept for at least 5 years.

(4)Guidelines Regarding Customers And Employees:

  1. If any of the following occurs, the requested service shall be politely rejected and such shall be reported to the direct supervisor:

(1)The customer is requested to provide relevant information to verify identity pursuant to the laws and regulations for such transactions and the customer persists in refusing to provide required information for such transactions; or

(2)Any individual or entity forces or attempts to force an employee not to create a transaction record and/or make a required report;

(3)The customer tries to persuade staff to waive necessary procedures to complete the transaction;

(4)The Customer requests a way to avoid filing reports;

(5)The customer aggressively tries to explain that the source of funds is clean or that such transaction is not for money-laundering purposes.

(6)The Customer insists that the transaction be completed immediately without a logical reason.

(7)The transaction is not consistent with the customer’s description thereof.

(8)The Customer attempts to bribe staff in order to acquire the financial institution’s service.

  1. If any of the following occurs with respect to an employee, random inspection shall be made of the matters handled by such employee and assistance from the audit section shall be requested when necessary:

(1)An employee leads a lavish lifestyle that cannot be supported by his/her salary;

(2)An employee is reluctant to take a vacation to which he/she is entitled; or

(3)An employee is associated with an unexplained mysterious significant deposit to and/or withdrawal from, his/her account.

(5)Provisions Regarding the Internal Reporting of Money Laundering and Procedures for Reporting Same to Designated Government authorities:

  1. The institution shall designate a deputy general manager (or an employee of equivalent rank) to head, coordinate and supervise compliance with Anti-Money Laundering Guidelines.

Such deputy general manager shall have attended anti-money laundering training courses. If such person is a new hire, such training course shall be taken within six months after hire.

  1. The business section of each branch shall designate a senior manager to supervise anti-money laundering work.
  1. Reporting Flow Chart (for transactions suspected to involve money laundering):

(1)An employee shall report immediately to his/her supervisor upon discovery of an unusual transaction;

(2)Such supervisor shall decide as soon as possible whether such transaction constitutes a reportable matter;

(3)If such transaction is determined to constitute a reportable matter, the employee shall immediately complete a report thereof;

(4)Such report shall be submitted to the section chief and then transferred to the head office;

(5)The section of the institution'shead office handling such matters shall report to the deputy general manager (or an employee of equivalent rank) in charge of these matters for approval and then report same to the Investigation Bureau.

(6)The matters to be reported to the Investigation Bureau in the preceding Item shall be completed within ten (10) business days from the time the institution becomes aware of the suspected money laundering.

  1. When the need for action is obvious, significant and urgent, the above procedures shall be done by fax or other available means; provided; that a written report of the information shall be done and sent to the Investigation Bureau of the Ministry of Justice, immediately thereafter.
  1. The original reporting record and transaction documentation shall be kept for five (5) years.

(6)Confidentiality Provisions Regarding Reported Information:

  1. Employees shall not disclose items reported under the preceding paragraph, and shall keep same confidential; and
  1. Documents related to items reported shall be deemed confidential and handled accordingly. Any disclosure thereof shall be handled according to related regulations.

(7)Periodic Review of the Adequacy of Internal Anti-Money Laundering Control Measures:

  1. Institutions shall periodically review their Anti-Money Laundering Guidelines;
  1. Institutions that have multiple branches shall have appropriate individuals hold seminars in different locations to review compliance with anti-money laundering policies.

(8)Responsibilities of the Audit Section:

  1. The audit section shall establish audit procedures based on internal control measures and related regulations and shall conduct periodic audits.
  1. The audit section shall periodically report to the supervising deputy general manager (or an employee of equivalent rank) regarding compliance with such control measures and provide same for reference in employee on-the-job training.
  1. Auditors aware of significant violations but who conceal or otherwise do not disclose same shall be punished by the head office.
  1. The internal audit section of an institution may designate specific person(s) to conduct random checks of transactions involving substantial amounts in order to ascertain the legality of such transactions.
  1. Sponsoring or Attending Periodic On-The-Job Training of Employees Regarding Anti-Money Laundering Laws and Regulations.

(1)Pre-Job Training: Multiple-hour training courses regarding the Anti-Money Laundering Lawand related regulations and the legal responsibilities of the employees of a financial institution shall be included in the training courses for new employees so that new employees understand the related regulations and their responsibilities thereunder.

(2)On-The-Job Training:

  1. Initial Education on Laws and Regulations: After promulgation of the Anti-Money Laundering Law, introduction shall be made to employees as soon as possible to introduce the Anti-Money Laundering Law and related laws and regulations and to explain the institution's measures to comply therewith. Related matters shall be planned by the section responsible for supervising the anti-money laundering program and handled by the section responsible for employee training.
  1. Regular On-The-Job Training:

(1)The employee training section shall hold seminars and related training courses annually to enhance employee awareness of anti-money laundering procedures and to prevent employee violations of laws and regulations;

(2)Courses and training related to the preceding item may be combined with other seminars/professional training courses;

(3)In addition to the institution's [internal trainers] lecturers, scholars and experts from the Ministry of Justice, the FSC, universities, colleges or other institutions may be retained, when necessary, to provide anti-money laundering training courses or lectures;

(4)In addition to explaining related laws and regulations, the anti-money laundering training courses shall also include case studies so that the employees may fully understand the characteristics of money laundering and the various types of suspicious transactions, thus helping to attune employees to suspicious transactions;

(5)The section planning or supervising the training of employees shall monitor employee attendance at anti-money laundering training. For employees who have not attended training courses, attendance at related training shall be encouraged as is appropriate under the circumstances; and

(6)In addition to the institution's internal on-the-job training, employees may be appointed to attend training courses sponsored by any party other than the institution.

  1. Lectures: To enhance employee understanding of anti-money laundering laws and regulations, the institution may invite scholars and experts to give lectures on specific topics.
  1. Awards for Employees that Contribute to Anti-Money Laundering Efforts Bank employees that make the following contributions to anti-money laundering efforts should be appropriately rewarded:

(1)An employee who discovers a suspicious transaction and reports such transaction pursuant to the relevant anti-money laundering laws and regulations which report aids in the preventing, or solving of a money laundering case.