The Financial Supervisory Commission yesterday announced it is to dispatch officials to scrutinize Mega International Commercial Bank (兆豐銀行) branches in New York and Panama as soon as Monday, as the government launches a probe into the lender after it ran into serious regulatory trouble in the US.
The New York State Department of Financial Services (DFS) on Friday last week said that it had imposed a US$180 million fine on Mega bank’s New York branch. The branch was found to have breached the US Bank Secrecy Act and to have been lax in monitoring its risk exposure in Panama.
The DFS said it had discovered that “a substantial number” of the bank’s customer entities were formed with the assistance of Mossack Fonseca, the Panama-based law firm at the center of the so-called “Panama Papers” scandal that emerged earlier this year.
As long as it gets the nod from the DFA, the commission will send officials to New York as soon as Monday, FSC Chairman Ding Kung-wha (丁克華) told a news conference in Taipei, adding that the FSC on Wednesday notified the New York regulator it wanted to send investigators.
“We will be gathering evidence about the circumstances that led to the fine,” Ding said, declining to comment further.
Beginning today, the commission is to summon for questioning “all persons of interest” connected with the case, which is likely to include former Mega Financial Holding Co (兆豐金控) chairman Mckinney Tsai (蔡友才), his successor as chairman, Shiu Kuang-si (徐光曦), and company president Wu Hann-ching (吳漢卿).
“While the violations cited in the DFS-issued consent order are limited to failure to satisfy regulatory filings and disclosure requirements, we will investigate whether the company was involved in money laundering activities,” FSC Vice Chairman Kuei Hsien-nung (桂先農) said.
Kuei said the commission would question Mega bank over its failure to satisfy legal compliance requirements, meet disclosure and filing standards, undertake customer due diligence and its lax supervision of its overseas branches.
Mega bank is the flagship banking unit of Mega Financial Holding Co (兆豐金控), a major international financial institution with about US$103 billion in assets, including US$9 billion at its New York branch, the DFS said in a statement.
As the case unfolds, the FSC has urged companies to improve their legal compliance efforts and refrain from a business culture that emphasizes maximizing profits and minimizing costs above all else.
The commission plans to organize seminars with academics and industry experts to elevate the legal compliance capacities of the nation’s financial companies, it said.
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