The Financial Supervisory Commission (FSC) yesterday bowed to requests from lawmakers to reveal suspicious accounts and transactions at Mega International Commercial Bank’s (兆豐銀行) New York branch, despite concerns the move might lead to a breach of confidentiality.
FSC Chairman Ding Kung-wha (丁克華) agreed to hold a closed-door meeting of the Finance Committee next week with information on 174 transactions involving 76 accounts in 2012 between Mega Bank’s New York branch and its Colon branch in Panama.
The nation’s top financial regulator obtained information during an overseas probe into violations of money-laundering rules by Mega Bank’s New York branch that incurred a US$180 million fine from the New York State Department of Financial Services and a NT$10 million (US$318,167) fine from the commission.
In addition, the commission asked the state-run lender to sack six top executives, disqualifying them from working for financial institutions for five years.
“It is legally questionable to share such information, as we have a confidentiality agreement with the US and Panama,” Ding told the Finance Committee, adding that compliance failures could result in more fines.
Ding said he was particularly concerned about disclosing the accounts of foreign customers, who might demand compensation that would not easily be paid if the revelations cause them any harm.
Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕), who introduced the resolution demanding the disclosure, said she and colleagues could keep the information secret as in the past with ongoing investigations.
Local Chinese-language media and Democratic Progressive Party lawmakers say they suspect Mega Bank helped the Chinese Nationalist Party (KMT) or criminal organizations to launder money.
Mega Bank has reiterated that the incident resulted from inadequate knowledge of compliance requirements in New York and underestimates of the seriousness of the issues.
Lu said that the incident raised a credibility crisis with the bank, financial and judicial authorities, adding that lawmakers had to intervene to calm the public outcry.
Mega Financial Holding Co (兆豐金控) chairman Michael Chang (張兆順) and a member of the investigative panel said the New York branch in 2014 reported a transaction of US$491 million as US$4.491 billion, among other bungles.
Mega Bank has asked lawyers to seek damages from former Mega Bank chairman Mckinney Tsai (蔡友才), Chang said.
The New York branch has paid the fine, equivalent to seven years of earnings at the branch given its net income of US$25 million per year, Chang said.
Ding said the commission has finished meting out administrative punishments and it is up to the Cabinet to decide whether any government officials should be punished.
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