Cabinet probes Mega Bank money laundering allegations

The report came after the first meeting of a task force formed under the orders of the Cabinet.

U.S. regulators said Friday that it slapped a massive fine of US$180 million (NT$5.7 billion) on Mega Bank’s New York branch for breaching the US’ Bank Secrecy Act.

The task force meeting on Monday was chaired by FSC Chairman Ding Kung-wha (丁克華) and was attended by representatives from the central bank, the Ministry of Finance (MOF, 財政部) and the Ministry of Justice (MOJ, 法務部).

FSC Vice Chairman Kuei Hsien-nung (桂先農) said yesterday that the goal of the special investigation team was to identify the perpetrators who were responsible for the Mega Bank case.

According to the commission, the New York State Department of Financial Services (NYDFS) started investigating Mega Bank last January and had sent correction requests to the Taiwanese bank on Feb. 9.

After receiving the requests, Mega Bank had offered an adjustment report to the U.S. financial regulator.

“Mega Bank had alerted the FSC about the NYDFS report within two months of proposing adjustments, as required by regulations,” said Kuei. “But it had not mentioned that (the NYDFS) would impose a massive fine on them for money laundering.”

The NYDFS said in a statement that the bank’s compliance officers were unfamiliar with U.S. regulations and had failed to periodically review data for suspicious transactions.

“(NYDFS) will not tolerate the flagrant disregard of anti-money laundering laws,” Financial Services Superintendent Maria T. Vullo said in a statement.

Vullo said compliance failures at the Mega banking enterprise indicated a “fundamental lack of understanding of the need for a vigorous compliance infrastructure.”

Mega Bank is the flagship banking unit of Mega Financial Holding Co. (兆豐金控).

The bank, which counts the Finance Ministry and the National Development Fund among its shareholders, agreed to fix its internal compliance system.

Of the bank’s US$103 billion in assets, US$9 billion is held at its New York branch, according to the NYDFS.

FSC officials said a draft amendment of an anti-money laundering law proposed by the Justice Ministry had been placed on an agenda for Cabinet review this Thursday.

If the amendment is passed, it would help strengthen regulations governing money laundering prevention, officials said.

Suspicions over Ex-chairman

The Mega Bank case has triggered speculation on the true reason for the resignation of former Mega Financial Chairman Mckinney Tsai (蔡友才), who stepped down from the post late March.

The FSC stated Monday it would not rule out requesting Tsai to meet with the investigation team and report about any possible involvement in the case.

“If we find it necessary to invite (Tsai) to come, he probably would,” said Kuei. “We do not rule out asking him to do so.”

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