Stricter Federal ATM Withdrawal Limits Spark Proportionality Debate as 10+ Million Account Holders Face Restrictions

Taiwan’s banking sector is undergoing a significant tightening of access controls, with over ten million account holders now facing substantially lower federal ATM withdrawal limits. This sweeping shift reflects a fundamental tension between fraud prevention and financial accessibility that has captured regulatory attention.

The Scale of Recent Changes

Eight major financial institutions have implemented restrictions on ATM withdrawal limits in recent weeks. Taishin International Bank’s announcement on July 23 exemplifies the magnitude: third-class digital deposit account holders will see their single withdrawal ceiling drop from NT$150,000 to NT$50,000 starting September 23, with daily limits capped at NT$100,000—affecting approximately 4.38 million customers alone. More restrictive still, both Cathay United Bank and Mega International Commercial Bank have set daily federal ATM withdrawal limits at just NT$10,000 for the same account category.

The Banking Bureau’s data reveals the scope: excluding postal services, seven national banks currently hold 11.39 million digital accounts, with 5.33 million classified as third-class accounts. Taiwan Cooperative Bank has separately implemented comprehensive reductions across 7.34 million financial cards. The institutions implementing these changes include Taiwan Bank, Mega International Commercial Bank, Taiwan Cooperative Bank, Chang Hwa Bank, Cathay United Bank, Chunghwa Post, Cathay Life Bank, and Taishin International Bank.

Fraud Prevention Drives the Policy Shift

Banks attribute these restrictions primarily to escalating fraud incidents, particularly among third-class digital deposit accounts where fraud risk has risen notably. However, the aggressive nature of these de-risking strategies has generated considerable public backlash. Citizens have expressed frustration about managing routine withdrawals of their own funds, questioning whether the restrictions effectively address fraud or merely shift costs through increased interbank transaction fees.

The postal system took parallel action in March, terminating agreed transfer services for accounts connected to cryptocurrency platforms—a blanket approach that Lawyer Zheng Xuefeng notes warrants scrutiny under proportionality standards. Such indiscriminate blocking effectively restricts all customers of virtual asset service providers without differentiation.

Regulatory Scrutiny on Proportionality

The Financial Supervisory Commission’s Banking Bureau has publicly expressed concern about the methodology. Deputy Director Wang Yunchung stated that regulators “most hope to see banks not handling issues through de-risking methods,” emphasizing that these federal ATM withdrawal limit reductions are voluntary bank decisions rather than regulatory mandates.

Wang defined the proportionality principle clearly: when existing limits pose minimal fraud risk yet institutions employ aggressive preventive measures, this violates proportionality standards. The FSC conveyed this principle to industry participants during a July 4 fraud prevention supervisors’ meeting, urging banks to balance safety with public financial convenience rather than imposing excessive restrictions.

These divergent approaches highlight an emerging question in financial regulation: whether current federal ATM withdrawal limit strategies represent proportionate responses or overreach that ultimately harms legitimate customers more than it prevents fraud.