Why do banks need to know reason for incoming wire transfers?

I apologize if this has been brought up already. This has been bugging me for quite some time and I hope someone can shed some light on the subject.

For our overseas customers, most choose to pay via Paypal, which works out great for us. But larger organizations often only want to pay by wire transfer. This is also fine, but every time the money comes in, our bank (MEGA) wants to know the reason we’re getting the money.

I keep telling my wife to tell them it’s none of their damn business, but she feels it’s better to tell them some BS.

Is this normal or just my bank’s policy? She has asked the bank and they can’t give her an explanation beyond “we just have to ask”. Unfortunately she won’t push beyond that.

I really wonder what would happen if we said it’s none of their business. Would they put a hold on the transfer (or send it back) if we refused to give a reason? One reason it bothers me is because I doubt they do this with large businesses. Can you imagine how many incoming bank transfers a company like ASUS would have? I doubt someone is on the phone with them for every transaction. So why us?

I figure something to do with taxes, but why not tell us that? I guess this point back to the sometimes “robotic” work culture here. Doing things and having no clue why you’re doing it…and then thinking people are idiots for asking why you’re doing it. “Why do you think? Because I HAVE to do it? Why would you need a reason beyond that? Idiot”. haha…

Thanks for your insight

It’s the law. They need to check due to money laundering regulations, it may also be related to tax if the amounts were large. I bring in money and tell them it is personal savings. Obviously if the money is being transferred in from a a range of overseas accounts it should be too often or too much if you want to avoid tax issues, that is if you haven’t registered your business in Taiwan.
Generally they are satisfied with a range of answers. Tick box exercise.

What are the best tick boxes to choose? Especially if you don’t want to trigger any audit or investigation for tax purposes?

Family Savings is sufficient? Is Personal Wealth vague and general enough? I forget if that’s usually an option.

I might be too honest but I always tell them what’s it actually for - as a self-employed freelancer mostly salary but whenever the transfer has expenses (eg if I hire an assistant, pay for a flight etc and get reimbursed by the client) I tell them $x is salary $y is expenses. They’re always happy and it makes filing a tax return much easier.

This is the reason. And for what it’s worth, Taiwan is complying with international standards to prevent money laundering. Telling them that it is none of their business is a good way to trigger a report to the Central Bank for an investigation that could prevent you from being able to make and receive remittances. I don’t think it is related to taxes or audits although these records could be used for those purposes if you got on the wrong side of the tax authorities.

Goose, I think cfimages has good advice but you might want to talk to an accountant about this.

I’ve found this to be a bit annoying as well. I’m with Mega Bank and they withheld a large payment, which by law they shouldn’t have. If an incoming payment is over a certain amount, then by law, they need to ask you what it’s for (the reasons why have been mentioned above). But I can’t remember what that amount is - something like 7-10 thousand US dollars (please correct me if I am wrong). The amounts I receive are normally less than that, but one got withheld anyway. They phoned the house, I was away, and because the person who answered the phone wasn’t sure if the money was mine (an in-law), the bank just held on to it. I had to go to the bank in person before they would clear it. I was quite worried that they would just send it back to my client. According to Mega Bank, they will question any amount from any bank account that belongs to a foreign business. I felt like changing to another bank, but couldn’t be bothered. I’ve just told everyone in my house if someone calls from the bank and asks if I am owed any money, just say YES!

Thanks for that. The law’s the law and I’ll live it that. I guess I just always felt funny about them asking. Just wish someone on the other end of the line could have said that. Would have made things a lot easier. Gotta wonder who’s [not] training these people.

And for everyone’s info, the amounts in question for us have been under $1000 US every time. I think the lowest was around $115. And yeah, we’re registered…but in the small potatoes “gonzuo shi” business type.

For conversation’s sake, do larger corporations (publicly traded and not) have to go through this? Or we talking a completely different level of checks for them? Just curious.

Thanks

For incoming transfers you have to report it to the central bank when above NT$500,000.

It’s not a major hassle, they want to know if we actually exported something and if it already has left.

We have never had an issue, and we handle incoming transfers on a weekly basis.

I get the same phone call everytime. And my situation is made worse cause the money I’m receiving is from my poker earnings, so I just make up some BS.

Btw, how much do your banks charge for RECEIVING wire transfers?

NT$200 per incoming.

Great thread.

My parents want to send me some money (gift) from abroad to an account in Taiwan, set for my name.

I have 2 questions:

1/ Mr He wrote “For incoming transfers you have to report it to the central bank when above NT$500,000.” <-- how do I apply? On-line? Is there any upper limit? Do I have to do it prior to the transfer or afterwards (what’s the time limit)?

2/ Will any tax be deducted from the sum? I am not a taxpayer in Taiwan and have no job. I heard that for Taiwanese nationals tax (贈與稅) free amount is NT$1,000,000 per year from each parent. What is the amount for foreigners? Are there any tax free limits? US$10,000? 20,000? 50,000? Is it per transfer or per year limit? If it’s a gift, what’s the best thing I should say to avoid tax to the bank when they call me asking for the money source?

Will be very very very grateful for explanations and/or relevant (government, Chinese ok) websites.

Reporting above ntd 500k - bank does it for you, another piece of paper for you to sign. Not to worry, I usually chop a big bunch of them at the time for the business, or that is, the teller does it.

It is based on self reporting. I tell them, and they report. Call it living costs, and you should be fine. Again, I have likely inadvertedly misreported an incoming transfer a few times and the bank at least did not care.

Only time the govt audited my incoming transfers was last year when I moved the business to Taipei. The tax office in Taipei had an out of the blue new company wanting a NTD500,000 sales tax refund, they wanted us to prove that we actually exported and got paid. Once they were satisfied I was no tax scammer, they left me alone as usual.

I wire in up to US$5000 occasionally and just call it “travel expenses”. The bank always checks with me first and wants my signature, but that is to protect them, me, and the person sending the money (which is also me).

I’ve wired in millions of $NT for various real estate transactions. Never had a problem.

If it’s your money, tell them it’s your money. Nothing that needs to be taxed.

I’ve never been audited. maybe i’m just lucky.

T