Taiwan's Mega Financial says U.S. regulators found lapses at second branch

Mega Financial Holding Co

30/09/2016 15:27

TAIPEI, Sept 30 (Reuters) - A U.S. state regulator has found 
the Chicago banking branch of Taiwan's Mega Financial Holding Co 
 2886.TW  has not met required compliance controls, the 
president of the Taiwanese financial firm told Reuters on 
Friday. 
    It is the second bank branch of the state-controlled firm to 
run afoul of U.S. financial authorities, after its New York 
branch was fined $180 million for lax compliance and anti-money 
laundering violations in August. 
    Mega Financial, which has close ties to Taiwan's government, 
has been under scrutiny since about 200 of its customers were 
named in the so-called Panama Papers, a massive leak of 
documents from a Panamanian law firm that put the spotlight on 
the shadowy world of offshore companies used to avoid tax. 
    President Bruce L.Y. Yang said financial regulators had 
uncovered problems with internal controls at the Chicago branch 
of Mega International Commercial Bank, known as Mega Bank, and 
requested the branch manager be replaced. 
    "The Chicago branch has to improve some deficiencies in 
regulatory compliance," Yang said. He added that the branch 
manager had been replaced, but it was unclear if the bank would 
face a fine. 
    Yang, the president of both the parent holding company and 
the bank, one of Taiwan's biggest lenders, said its chairman, 
Michael C.S. Chang, would travel to Chicago, New York and Canada 
next week. 
    Terry Horstman, a spokesman for the Illinois state banking 
regulator, whose jurisdiction includes Chicago, declined to 
comment on whether the agency had examined or probed the bank. 
    "At this point in time, there is no public enforcement 
action against Mega International Commercial Bank's branch in 
Chicago by the Illinois Department of Financial & Professional 
Regulation's banking division," Horstman said. 
    Chang told a news conference earlier this week that Mega 
Bank's overseas branches were coming under greater scrutiny by 
regulators abroad following critical lapses involving suspect 
transactions between its New York and Panama branches. 
 urn:newsml:reuters.com:*:nL3N1C42N5 
    Chang said the branches underwent annual inspections but 
regulators, including those in the United States, Canada and 
Panama, have become more stringent about them in the wake of the 
fine the New York State Department of Financial Services slapped 
on Mega's New York branch in August. 
    The New York regulator had found lax compliance and 
anti-money laundering violations involving Panama transactions. 
    Mega Bank has branch offices in Los Angeles, Chicago and New 
York. 
 
 (Reporting by Liang-sa Loh; Additional reporting by Suzanne 
Barlyn in New York; Writing by J.R. Wu; Editing by Alex 
Richardson) 
 ((jr.wu@thomsonreuters.com; +886 2 2500 4881; Reuters 
Messaging: jr.wu.thomsonreuters.com@reuters.net)) 
 
Keywords: TAIWAN MEGAFINANCIAL/