Mega International Commercial Bank of Taiwan has been asked to pay $180m in fine by the Department of Financial Services (DFS) for breaching New York’s anti-money laundering (AML) rules.
A probe by DFS found the bank’s head office to be indifferent toward risks related to transactions involving Panama, and identified several suspicious transactions between the bank’s New York and Panama branches.
The investigation further revealed that several customer entities, which have or had accounts at several other Mega Bank branches, were formed with the assistance of Mossack Fonseca, the Panama-based law firm that was at the centre of the Panama Papers scandal.
DFS said that the bank’s AML officer for the New York branch, and the branch’s chief compliance officer lacked familiarity with US regulatory rules.
The New York branch procedures did not offer adequate guidance on the reporting of suspicious activities and had inconsistent compliance policies, and compliance staff at the head office and branch failed to periodically review surveillance monitoring filter criteria that aim to identify suspicious transactions, DFS alleged.
DFS superintendent Maria Vullo said: “The compliance failures that DFS found at the New York Branch of Mega Bank are serious, persistent and affected the entire Mega banking enterprise and they indicate a fundamental lack of understanding of the need for a vigorous compliance infrastructure.
“DFS's recent examination uncovered that Mega Bank's compliance program was a hollow shell, and this consent order is necessary to ensure future compliance.”
Apart from the fine, Mega Bank has also been directed to install an independent consultant to implement changes to its policies, immediately address compliance deficiencies at the New York branch, and engage an independent monitor selected by the DFS to review the effectiveness of the branch's compliance program.
“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,” Vullo added.