Taiwan is investigating a bank linked to the so-called Panama Papers scandal, in the wake of a $180 million fine levied by USA authorities for “flagrant disregard” of anti-money laundering laws. Mega International has two branches there.
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DFS’s investigation identified a number of suspicious transactions running between Mega Bank’s NY and Panama Branches. The branch was found to have breached the US’ Bank Secrecy Act.
If an individual is to hold another position while also serving as the branch’s compliance chief, the bank should have the appointment approved by local financial regulatory authorities and appoint someone familiar with local financial laws and regulations, he said.
Also, the ministry will require the banks to hire locals for the positions because they are more likely to have a better understanding of local laws and regulations, he said.
American regulators last week said Taiwan’s Mega International Commercial Bank showed indifference towards transactions carried out through Panama, which it calls a “high-risk jurisdiction for money-laundering”.
“DFS will not tolerate the flagrant disregard of anti-money laundering laws and will take decisive and tough action against any institution that fails to have compliance programs in place to prevent illicit transactions”, said Financial Services Superintendent Maria T. Vullo.
Compliance staff at both the head office and branch failed to periodically review surveillance monitoring filter criteria created to detect suspicious transactions.
Mega Bank has had similar violations in other foreign markets, the FSC said.
The Taiwan dollar softened NT$0.222 to NT$31.840 per U.S. dollar.
A branch of Mega Bank in Australia was found to have flaws in its compliance with Australian money laundering regulations, but no penalties were imposed, the commission said.
The regulator’s examination of the lender’s NY branch took place in the first quarter of 2015 and was “extremely troubling”, according to the consent order. In a stock exchange statement on Friday, Mega Financial said that the fine for the unit was “bearable” but would hurt earnings this year.
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Meanwhile, the issue has raised suspicion about the resignation of former Mega Financial chairman Mckinney Tsai (蔡友才), who stepped down from the post in late March.
