State-run Mega International Commercial Bank (兆豐銀行) was yesterday fined NT$10 million (US$360,972) for its lax internal control over 28 mortgages totaling NT$350 million, whose applications were made by dummy accounts, the Financial Supervisory Commission said.
Mega Bank became the nation’s third bank to be punished for failing to detect mortgage applications made by dummy accounts. Hua Nan Commercial Bank (華南銀行) was fined NT$3 million in 2016 for offering mortgages to 34 figurehead accounts, some of whom belonged to vagrants, and Hwatai Bank (華泰銀行) was fined NT$3 million in 2018, commission data showed.
“It seems that this specific type of mortgage fraud has not been effectively curbed among local banks, ” Banking Bureau Deputy Director-General Huang Kuang-hsi (黃光熙) told a videoconference in New Taipei City.
Photo: Lee Chin-hui, Taipei Times
An employee surnamed Shih (石) working at Mega Bank’s Sindian branch (新店) in New Taipei City approved the mortgages from July in 2015 to the end of 2019.
However, the lender last year found in an internal audit that the mortgage applications were made by figureheads who used funds from a third party to repay the loans, Huang said.
Shih did not review the applicants’ profiles or conform to the bank’s loan approval criteria while approving the applications, and even helped transfer the third-party deposit money into the dummy accounts, he said.
Prosecutors have been working on the case since last year and have charged Shih, her ex-husband, surnamed Hsu (許), and a land administration agent surnamed Chou (周) with contraventions of the Banking Act (銀行法) and fraud, local media reported.
Shih reportedly worked with Hsu, who was a real-estate agent, and allegedly colluded with Chou to inflate the prices of the apartments she bought in Taipei and New Taipei City to obtain higher mortgages, and used the loan to buy other properties, local media reported.
Huang did not provide further details, but said that Mega Bank has made many mistakes in the mortgage operations, including incorrect collateral appraisal, and allowing the same employee to review loan applications and appraise collateral.
Mega Bank has estimated that it would likely incur a loss of NT$22 million due to the 28 problematic mortgages, Huang said.
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