Taipei-Taiwan's Financial Supervisory Commission (FSC) said Thursday that it will conduct an examination of three U.S. branches of Mega International Commercial Bank and may issue more fines to the Taiwanese bank, after it was fined US$29 million by the U.S. Federal Reserve for anti-money laundering violations.
In a statement, the FSC said it slapped Mega Bank with a fine of NT$10 million Sept. 4, 2016 after New York State's Department of Financial Services (NYDFS) first announced a fine for the bank's New York branch.
The FSC said it will wait and see how the U.S. responds to Mega Bank's progress in improving the issue before deciding whether and how much to fine the bank again.
The latest penalty for Mega Bank for failing to maintain an effective program to comply with the U.S. Bank Secrecy Act and anti-money laundering laws at its three U.S. branches in New York, Chicago and Silicon Valley, came after the NYDFS fined the New York branch US$180 million in August 2016 for the same violations.
In announcing the fine, the NYDFS said it identified "a number of suspicious transactions" between the bank's New York and Panama branches and discovered that "a substantial number" of the bank's customer entities were formed with the assistance of the Mossack Fonseca law firm in Panama, a law firm embroiled in shell company activity.
According to Taiwan's Ministry of Finance (MOF), the fine announced by the FED is directed at the same failings that were discovered during the series of examinations in 2016, but is a federal rather than a local government fine.
Citing the order attached to the Fed announcement, however, the MOF noted that the Fed has acknowledged and approved of efforts toward improvement that Mega Bank has made over the matter.
"The bank has undertaken enhancements to its corporate governance and is committed to implementing improvements in its oversight and compliance program for activities involving the branches," the Fed said.
With this order, both Mega Bank and its three U.S. branches are required to submit detailed, written plans on how to further enhance their corporate management and compliance programs.
The deadline for these proposals ranges from 30 to 60 days, depending on the branch in question.
Mega Bank President Bruce Yang (???) said that his bank has invested over NT$1 billion (US$33.8 million) since August 2016 to reform its operations so that it can fully comply with U.S. anti-money laundering regulations.
The bank will follow the requirements laid out by the Fed's latest order and continue to implement change, Yang said.
Source: Focus Taiwan News Channel