Ding Kung-Wha, Chairman of Financial Supervisory Commission, resigned after New York State’s Department of Financial Service (DFS) fined Mega Financial Holding Co. Ltd.’s New York branch, US$180 million, for breaching anti-money laundering rules. The branch was accused of violating New York’s requirements for reporting suspicious activities, rather than engaging in money laundering activities.
The DFS said it also discovered that “a substantial number” of the bank’s customer entities were formed with the help of the Mossack Fonseca law firm in Panama. The DFS found that in 2013 and 2014 nearly $11.5 billion of credit transactions took place between Mega Financial ‘s New York and Panama branches. Lai Shyh-bao, a prominent member of opposition party Kuomintang (KMT) said that none of the transactions were from Taiwan.
Names of about 200 corporate customers of Mega Financial were found in the leaked Panama Papers. Mega Financial is checking the identities of these customers.
Taiwanese President Tsai Ing-wen said that the case had damaged Taiwan’s reputation and created public mistrust about supervision of the financial sector. It is anticipated that the government will step up its efforts in monitoring banks to rebuild trust in the financial system. This may lead to the reduction in operational flexibility of the financial institutions. More non-compliance cases will surface up during the investigation.
Mckinney Tsai, former Mega Financial Holding Co. Chairman, and the incumbent chairman, Shiu Kuang-si, are being questioned by the Taiwanese authorities. Tsai has been banned from travelling abroad. Shiu Kuang-si is said to be the brother-in-law of Taiwan’s central bank governor.4 October 2016