Nan Shan Life Insurance Co (南山人壽) has been fined NT$7.6 million (US$271,914) for breaches of the Insurance Act (農業保險法) due to lax internal controls, risk controls and anti-money-laundering practices, the Financial Supervisory Commission said on Thursday.
The life insurer’s salespeople illegally paid premiums with their own credit cards on behalf of clients to earn rewards points offered by banks after reaching agreements with clients, the commission said.
The clients would give money to the salespeople and share the rewards, it said.
From September 2018 to June last year, 122 salespeople paid NT$779 million in premiums in 588 transactions, Insurance Bureau Director Tsai Huo-yen (蔡火炎) told a news conference in New Taipei City.
Nan Shan Life’s system should have blocked such payments, as the salespeople were neither policyholders nor beneficiaries, Tsai said.
However, the company’s systems failed to detect the discrepancies, he said.
The lapse in this area shows that the company did a poor job of curbing money laundering, as it is important to authenticate payer identities, he said.
The commission has demanded that Nan Shan Life fix its systems, he said.
The 122 salespeople worked in branches across Taiwan, with it likely that some found loopholes in the system and shared the information with colleagues, Tsai said.
Nan Shan delayed a report about a loss in June last year of 37 million euros (US$44.71 million) from an investment in German payments provider Wirecard AG, waiting until August last year, the commission said.
Wirecard filed for bankruptcy last year.
That indicated faulty internal controls, the commission said.
Nan Shan also exercised poor risk control over investments, as its investment review committee in 2018 increased the chief investment officer’s authorization limit to the same as the committee’s limit.
“That meant almost no limit at all, meaning the chief investment officer could approve almost any transaction,” Tsai said.
The commission in 2019 fined Nan Shan Life NT$30 million for its “Envision Project” information system, which wrongfully suspended or halted 152,000 policies.
However, the system that failed to catch the problematic premium payments was the old system, Tsai said.
Nan Shan Life has been fined NT$59.8 million by the commission over the past three years, the most among Taiwan’s financial institutions, commission data showed.
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