On January 7, Taiwan’s Financial Supervisory Commission (FSC) announced amendments to its “Directions for Encouraging the Public to Report Illegal Financial Activities by the Financial Supervisory Commission.” The amendments substantially increase the monetary amount of rewards available to whistleblowers who report financial crimes.
The FSC is issuing these amendments “in order to encourage the public to report illegal financial activities, increase the incentive to whistle blow, and to maintain financial market order.” Analogous to the United States’ Securities and Exchange Commission (SEC), the FSC is responsible for regulating securities markets, banking, and the insurance sector.
The FSC is increasing whistleblower rewards for major financial crimes by tenfold and rewards for minor crimes by fivefold. According to Regulation Asia, whistleblowers whose disclosures lead to a FSC enforcement action which result in at least a NT$10 million (approximately USD$350,000) fine or three years’ imprisonment will be entitled to a reward of NT$4 million. For cases that result in a fine between NT$5 million and NT$10 million, or a prison sentence between one and three years, whistleblowers will receive a NT$2 million award. Both these award amounts are ten times the current amount that whistleblowers can receive. For cases which result in smaller fines, the whistleblower awards will be raised fivefold by the new amendments. Since its whistleblower program began, the FSC has awarded NT$2.32 million to whistleblowers, including NT$305,000 issued to seven individuals in 2020, according to Taipei Times.
The new amendments also establish that the FSC will not grant whistleblower rewards to individuals who report anonymously or report under a false name. According to the FSC, this measure aims “to prevent the public from making frivolous whistleblower reports, to avoid false claiming of whistleblower rewards, and to confirm the veracity of reported information.”
In contrast to the FSC, the SEC Whistleblower Program allows whistleblowers to report anonymously through the use of an attorney. Furthermore, unlike the FSC, the SEC does not prescribe set amounts for whistleblower awards and instead bases them relative to the amount of sanctions and weighs a number of factors. Factors that go into an SEC whistleblower award decision include the timeliness of the disclosure and the culpability of the whistleblower. Qualified SEC whistleblowers are entitled to an award of 10-30% of funds recovered by the government. In 2020, the SEC did not approve a proposed rule which would have capped the largest awards. Whistleblower advocates argued such a cap would disincentive whistleblowing and undermine the deterrent effect of the program. The SEC Whistleblower Program has proven to be highly successful: more than $2.7 billion in total monetary sanctions have been triggered by whistleblower disclosures and approximately $737 million has been awarded to whistleblowers.
Press Release- FSC amends ” Directions for Encouraging the Public to Report Illegal Financial Activities by the Financial Supervisory Commission”-Financial Supervisory Commission