Prosecutors yesterday summoned former Mega Financial Holding Co (兆豐金控) chairman Mckinney Tsai (蔡友才) for questioning, and restricted him from leaving the nation, after the state-run company’s New York banking branch was ordered to pay a massive fine for violating US rules against money laundering.
Mega Financial chairman Shiu Kuang-si (徐光曦) was also summoned by prosecutors for questioning, the Taipei District Prosecutors’ Office said.
Prosecutors yesterday sent investigators to gather details regarding the case at the Financial Supervisory Commission, the Ministry of Finance and Mega Financial, and listed Tsai as a defendant as they investigate possible violations of the Money Laundering Control Act (洗錢防制法), Banking Act (銀行法) and the Financial Holding Company Act (金融控股公司法).
The New York State Department of Financial Services (DFS) on Friday announced that it has imposed a US$180 million fine on Mega International Commercial Bank’s (兆豐銀行) New York branch.
The branch was found to have breached the US Bank Secrecy Act.
Mega bank is the flagship banking unit of Mega Financial Holding.
Tsai said in a statement that he fulfilled all of his responsibilities as the company chairman prior to his departure in March.
Tsai announced his resignation one month after Mega bank received an examination report from the DFS, in which the New York regulator said that it had identified a number of suspicious transactions between the bank’s New York and Panama branches, and that a substantial number of the bank’s accounts were opened with the assistance of Mossack Fonseca, a Panama-based law firm that had facilitated shell company activities.
Mega bank’s infraction was a failure to meet regulatory filing requirements, Tsai said, adding that the bank was not accused of money laundering.
Mega bank was fined due to the lack of familiarity with US financial regulatory guidelines, to which the bank’s legal compliance officers had shown a dismissive attitude during meetings with the DFS when its internal control protocols were found to be inadequate, he added.
The DFS had approved a compliance improvement plan filed by Mega bank on March 24 before he tendered his resignation on March 29, Tsai said.
No further responses will be issued, he said.
Meanwhile, Mega Financial’s board of directors has formed a task force to satisfy DFS demands and improve money laundering controls at overseas branches, and to improve communication with foreign regulators, Mega Financial vice president Chen Chung-hsing (陳松興) told a news conference in Taipei.
Chen issued an apology and said that the severity of punitive consequences far outweighs the concerns about the high costs of meeting legal requirements, adding that the company would move away from its profit and efficiency-focused corporate culture.
Tsai is chairman of an investment subsidiary that was established to carry out plans by Ruentex Group (潤泰集團) chairman Samuel Yin (尹衍樑) to amass shares in CTBC Financial Holding Co (中信金控) in a bid to win seats on the firm’s board of directors in next year’s election.
However, market observers have said the plans might change as the Mega Bank case unfolds.
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