The New York State financial regulator imposed a $180 million fine on Taiwan’s Mega International Commercial Bank for anti-money laundering failures that included links to the law firm at the center of the Panama Papers scandal.
The Department of Financial Services said Friday that Mega Bank’s head office was indifferent toward risks associated with transactions involving Panama, and an investigation identified a number of suspicious transactions between the bank’s New York and Panama branches. The probe determined “a substantial number” of entity customers were formed with the assistance of the law firm Mossack Fonseca in Panama, the firm whose data was leaked in the Panama Papers scandal.
Mega Bank’s anti-money laundering officer for the New York branch was based in Taiwan, and the officer and the branch’s chief compliance officer both lacked familiarity with U.S. regulatory requirements, DFS said. The chief compliance officer had key business and operational responsibilities along with the compliance role, DFS alleged.
The bank didn’t immediately return a call for comment.
Maria Vullo, superintendent of DFS, in a statement called Mega Bank’s compliance program a “hollow shell,” and said its failures are “serious, persistent and affected the entire Mega banking enterprise.”
“DFS will not tolerate the flagrant disregard of anti-money laundering laws and will take decisive and tough action against any institution that fails to have compliance programs in place to prevent illicit transactions,” said Ms. Vullo.
The company apparently acknowledged the penalty in a Chinese statement posted to its website, but there was no corresponding English-language comment. Reuters reported Monday the bank’s president offered to resign, but the chairman asked him to stay. A vice president quoted by Bloomberg on Monday said the bank isn’t involved in money laundering, and it’s committed to enhancing its compliance system.
In addition to the fine, DFS ordered Mega Bank to install an independent consultant to implement changes to its compliance program, and the bank will be required to retain a monitor for two years who will also review the bank’s transactions from 2012 to 2014 for any violations of U.S. sanctions regulations. That monitor will be chosen, and report directly to, DFS, the agency said.
In the wake of the DFS penalty, Taiwanese media reports said regulators are asking banks to tighten controls over their overseas operations. Reports on Monday said Taiwan’s government will investigate Mega Bank to see if any crimes were committed.