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Laws & Regulations Database of The Republic of China (Taiwan)

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1.Signed on October 30, 2000; Entered into force on October 30, 2000.
Memorandum of Understanding on Information Sharing and Regulato-
ry Cooperation between the Bureau of Monetary Affairs of the Mi-
nistry of Finance of the Republic of China and the Superintende-
nce of the Financial System of El Salvador

The Bureau of Monetary Affairs of the Ministry of Finance of the
Republic of China and the Superintendence of the Financial Syst-
em of El Salvador (hereinafter referred to as ”the Bureau” and
”the Superintendence”respectively or ”the Supervisory Autho-
rities” collectively) ,

Ⅰ) That it is necessary to establish a scheme of bilateral coo-
peration to achieve adequate and efficient supervision of f-
inancial entities of the Republic of China and of El Salvad-
or, especially financial conglomerates,
Ⅱ) That the strengthening of each Supervisory Authority's abil-
ity to prudently supervise their financial systems, especia-
lly financial conglomerates which are part of them, requires
a flow of timely and reliable information based on mutual c-
ooperation between the Supervisory Authorities of both coun-
tries, and that the above will not only enhance the protect-
ion of depositors and foster the development of sound and s-
trong financial systems, but also strengthen financial, com-
mercial and cultural relations be ween both countries,
Ⅲ) That given the opening of branches and subsidiaries by pare-
nt companies domiciled in the Republic of China and in El S-
alvador, the exchange of information between the Supervisory
Authorities of both countries is of great importance,
CONSEQUENTLY, in the spirit of mutual trust and understanding a-
nd within the limitations of their respective legal frameworks,
the Supervisory Authorities agree to sign the following Memoran-
dum of Understanding (MOU) on Information Sharing and Regulatory
Cooperation subject to the following terms:
For the purpose of this MOU, the terms used will be defined as
* Financial entity: a corporate entity that is part of the co-
untry's financial system.
* Subsidiary: a corporate entity controlled through share own-
ership by a bank of the home country. In the present agreem-
ent, such entities will receive the same treatment as that
of branches of foreign banks.
* Parent company: a corporate entity that controls an economic
* Holding company: a corporate entity whose main activity con-
sists in having share control of other entities.
* Economic group: a collection of national and/or foreign cor-
porate entities formed by at least two firms having common
decision making and economic goals.
* Financial conglomerate: a conglomerate whose business is fi-
nancial, i.e. banking, insurance or securities business.
The Supervisory Authorities agree to adopt the Core Principles
stated in the Basle Committee's document ”Principles for the
supervision of banks' foreign establishments” (May 1983). Co-
nsequently, they are in agreement with the role assigned to t-
he supervisory entity of the parent company's home country and
with the role assigned to the supervisory entity of the host
Accordingly, the Supervisory Authorities assume that the pare-
nt company's home country supervisor will supervise the organ-
ization, management and internal control, risk management, ca-
pital adequacy and any significant element that can affect the
soundness and stability of the group, and to this effect that
it has access to any relevant information. On the other hand,
the host country supervisor will supervise the organization,
management, internal control, risk management, efficiency of
money (asset) lauring controls, capital adequacy and solvency
of the foreign entity's activities in the host country. In ad-
dition, the host country supervisor will insure the adequacy
of the financial statements and the accuracy of the informati-
on received by the home country supervisor in accordance with
the rules governing each of the two parties' financial system.
Furthermore, in the case that entities in the host country wo-
uld have opened either branches or subsidiaries in third coun-
tries, the host country supervisor will acquire the responsib-
ility as home country supervisor in relation to the correspon-
ding subgroup, as long as the regulation in those third count-
ries allows it.
The Supervisory Authorities agree to cooperate so as to reach
the objectives expressed in the above section. For this purpo-
se, the Supervisory Authorities will, either by their own ini-
tiative or by request, exchange relevant information if avail-
able, and in general, will assist as much as possible in the
fulfillment of each other's duties.
The parent company's home country supervisor is particularly
interested in identifying those entities belonging to the gro-
up or in which the latter has significant participation, and
in knowing the intra-group operations and problems or weaknes-
ses manifested in their operations, their internal controls,
their financial situation or their image in the host country.
Moreover, the home country supervisor is interested in obtain-
ing any relevant information that may cause adjustments to the
consolidated financl statements. Hence, as long as the inform-
ation is relevant, the home country supervisor will be intere-
sted in knowing the observations, requirements and penalties,
and in general any measure adopted by the host country superv-
isor against the entities or the administration of the group.
Furthermore, the home country supervisor will be interested in
any information that the host country supervisor obtains that
casts doubts upon the group conducting its operations in a so-
und and prudent manner. Simultaneously, the home country supe-
rvisor can request the support of the host country supervisor
to ensure that entities operating in the host country can pro-
vide their parent companies with the accounting information n-
eeded to manage risk and to perform consolidated statements,
especially informa on regarding credit and security portfolios
The host country supervisor will be especially interested in
knowing about the quality of management and internal control
of the parent or the holding company, any problem or weakness
at a group-wide level, and measures adopted by the home count-
ry authority that could affect the stability of the entities
operating in its territory.
The Supervisory Authorities will be interested in knowing the
state and evolution of their respective financial and banking
markets and the condition of the banking groups over which th-
ey have any authority.
Available information that will be exchanged must be used for
supervisory purposes only. The information to be exchanged wi-
ll be subject to the legal restrictions and the professional
secrecy regulations prevailing in each country.
As long as the host country's laws allow it, the home country
supervisor will be able to perform, in coordination with the
host country authority, on-site supervision. All the informat-
ion and activities related to that matter will be strictly co-
Both Supervisory Authorities, upon the initiative of either of
them and always by agreement, can include an entity located in
both countries in their on-site inspection plans. If the home
country supervisor participates in any on-site examination, it
will be considered as a guest party.
When the home country supervisor requires any information to
perform its functions, it must request such information from
the host country supervisor so that such requirement can be a-
dded to the plan of the on-site examination to which the home
country supervisor is invited.
The Supervisory Authorities agree, when necessary and upon re-
quest of the other party, to exchange lists of corporate enti-
ties considered to be a member of the groups under supervision
, regardless if their financial statements are consolidated or
not. At the same time, they will provide, when necessary and
upon request of the other party, information about relevant i-
ntra-group operations that took place in the host country as
well as in third countries.
If legally required, banks should seek approval from their re-
spective supervisory authorities to establish branches or sub-
sidiaries in foreign territories and to acquire direct or ind-
irect participation on any existing foreign entity. In any ca-
se, the host country may deny the authorization according to
its laws and regulations.
The Supervisory Authorities will demand that the parent compa-
nies of foreign subsidiaries have timely information about the
financial state of their subsidiaries, and about their risk l-
evels and risk management practices both individually and on a
consolidated basis. At the same time, the Supervisory Authori-
ties must subject subsidiaries and branches in foreign countr-
ies under their supervision to external auditing, preferably
by the company performing the auditing of the group as a whole
The host country authority will subject the foreign bank enti-
ties operating in its territory to the same high standards and
supervision procedures as domestic entities are subjected to.
The Supervisory Authorities will consult each other freely ov-
er any issue and can request the exchange of any significant
information related to such subsidiaries or branches.
The Supervisory Authorities are interested in obtaining any i-
nformation obtained by either of them that could be relevant
to the group's supervision. Similarly, they will be interested
in knowing any relevant changes in local regulations affecting
those entities.
In both countries, bank's participation in non-financial enti-
ties is subject to some limitations. The Supervisory Authorit-
ies will be interested in any information on this subject.
Officials in charge of supervision in both countries will be
able, at any moment, to ask for advice and clarifications fr-
om the other party, and to request any meeting considered ne-
All communications between the Supervisory Authorities will
be between the principal contact points as set out in the An-
nex unless otherwise decided. The Annex may be amended by wr-
itten notice from either the Supervisory Authorities without
the need for re-signature of this MOU.
This MOU, done in triplicate in the English, Spanish and Chi-
nese languages, each version being equally authentic, will t-
ake effect on the date of signature. In case of any discrepa-
ncy in the interpretation of the MOU, the English version sh-
all prevail.
IN WITNESS WHEREOF, the undersigned, being duly authorized f-
or this purpose, have signed this MOU, this thirtieth day of
October, 2000 in San Salvador.

For the Bureau of Monetary Affairs For the Superintendence of
of the Ministry of Finance of the Financial System of El
the Republic of China Salvador
Yao-Shing Wang Guillermo A. Argumedo
Director General Superintendente

Contact points:
The Bureau of Monetary Affairs
Division of International Banking
Bureau of Monetary Affairs
Ministry of Finance
9th Floor, No. 87, Section 2,
Nan-King East Road
Taipei, Taiwan
Republic of China
Tel: (886-2) 25360624
Fax: (886-2) 25360615
The Superintendence of the Financial System
7a. Av. Norte No. 240,
entre Calle Arce y 1a. Calle Poniente,
Apartado Postal No. 2942,
San Salvador, El Salvador, C. A.
Tel. (503) 281-1466
Fax (503) 281-2441
Web site:Laws & Regulations Database of The Republic of China (Taiwan)