Common ways to violate banking laws, be careful you may have violated the law! Banking lawyers explain

In an era of increasingly frequent modern financial activities, many people may inadvertently violate the Banking Act because they do not understand the legal provisions. The Banking Act has a wide range of regulations. In addition to bankers, ordinary people may also face criminal liability if they are involved in illegal fund-raising, underground foreign exchange, etc. This article is analyzed by a Taipei banking lawyer to help you avoid the risk of accidentally violating the law!

What does banking law mainly regulate?
According to Article 29 of the Banking Law, "non-banks are not allowed to engage in the business of accepting deposits, managing trust funds, handling domestic and foreign exchange transactions, etc." In short, unless you are a legitimate bank or financial institution, the act of "taking money to do things" is likely to be illegal.

Many people mistakenly believe that as long as they do not commit fraud and make normal repayments, everything will be fine. But in fact, as long as your behavior meets the criteria of "accepting funds from the majority of people and promising to pay compensation", it may be deemed as "illegal fund-raising", which is punishable by a maximum of 3 to 10 years in prison, or even a fine of up to 100 million yuan (Article 125 of the Banking Law).

The most common illegal behaviors that people are misled about

1. Private mutual aid associations and investment dividends may cross the line
   Many private bidding clubs and investment groups will attract friends and relatives to join with "high returns". For example:

"Fixed monthly dividend of 5%, guaranteed profit"
"Everyone pools money together to invest and share profits"
If such behavior is not approved by the Financial Supervisory Commission, it may be considered by the prosecutors as "illegal operation of banking business." In the past, there was a case where a company raised funds from the public in the name of "stock trading" and the person in charge was sentenced.

2. Underground exchange (helping others to exchange currency may also be illegal)
   It is common to see currency exchange advertisements on the Internet or social media that say: "The exchange rate is better than that of banks, helping you save on handling fees." However, if you "regularly exchange foreign currencies for others" and earn the price difference, you may be involved in illegal currency exchange business.

There was a case where a foreigner in Taiwan was prosecuted under the Banking Act for providing "Taiwan dollar exchange for US dollars" service in a LINE group for a long time.

3. When trading virtual currencies, beware of the "illegal money-making" trap
   In recent years, many virtual currency and blockchain investment projects have advertised "high return rates and guaranteed profits", but if they raise funds from the general public without permission, they may violate the law. For example:

Issue its own virtual currency and promise future appreciation
In the name of "mining machine investment", members are required to pay membership fees
The Financial Supervisory Commission has warned many times that unapproved ICOs (initial coin offerings) may involve the Banking Act or the Securities and Exchange Act, and several cases have been investigated by prosecutors.

How to avoid accidentally violating banking laws?
If you or your relatives and friends are involved in private investment, currency exchange, virtual currency trading and other activities, it is recommended to pay attention to the following points:

Don’t promise “fixed profits”: Even when investing between friends and family, you should avoid using terms such as “guaranteed returns”.
Avoid "public fundraising": Even a small-scale LINE group may be considered to be "raising funds from unspecified persons."
Find legal channels to exchange foreign currency: Foreign currency exchange should be done through banks or legal remittance institutions. Private currency exchange may violate the law if it is "commercial".
What should I do if I have been investigated?
If you receive a subpoena or an investigation letter from the Banking Bureau due to the above-mentioned behavior, it is recommended that you:

✅ Keep silent and don’t sign documents casually

✅ Contact a professional banking lawyer as soon as possible to assess whether there is room for innocence or sentence reduction

✅ Organize relevant financial flow evidence, such as contracts, conversation records, and remittance certificates

Many people involved in the case were initially just helping their relatives or friends invest or exchange currency, but because they were not familiar with the law, they were prosecuted for felonies. If they can seek the help of a lawyer early, they may be able to obtain a deferred prosecution or a lighter sentence.

Conclusion: Invest legally and protect your own rights and interests
The penalties under the Banking Law are quite strict. Even if the behavior is done with good intentions, you may face criminal liability due to insufficient legal knowledge. If you have any business model involving fund transactions, be sure to confirm whether it complies with the regulations, or consult a professional banking lawyer to avoid accidentally breaking the law!

⚖️ Do you have questions related to banking law? Taipei banking lawyers provide professional consultation, contact us now!

related news:https://fdlaw.com.tw/blog/fraud-3/

related news:https://fdlaw.com.tw/blog/banking-act/

Banking Law # Banking Lawyer # Taipei Banking Lawyer # Illegal Fund Raising # Underground Foreign Exchange # Legal Risks of Virtual Currency

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