TAIPEI, Sept 28 (Reuters) - Taiwan state-controlled firm Mega Financial Holding Co’s chairman said overseas branches of its banking unit are coming under greater scrutiny by regulators overseas following critical lapses involving suspect transactions between its New York and Panama branches.
The heightened inspections come after the New York branch of Mega International Commercial Bank, known as Mega Bank, was fined $180 million last month by the New York State Department of Financial Services (DFS) for lax compliance and anti-money laundering violations, involving Panama transactions.
“Currently, a lot of countries are closely inspecting Mega Bank’s local branches,” said Michael C.S. Chang, speaking at a news conference.
“These are regular annual inspections, but after this case happened, the authorities have become more stringent,” Chang said, naming U.S., Canada and Panama authorities as among those stepping up scrutiny.
Mega Bank will “actively communicate” with regulators, said Chang, who is also the chairman of Mega Bank.
He said Mega is reviewing all operations and procedures at its overseas branches and may consider streamlining or closing branches in jurisdictions that are considered high risk.
He said the New York branch would remain intact.
The bank said in a statement issued Wednesday that it did not follow regulatory procedures in reporting suspect transactions between its New York and Panama branches and is currently conducting a full review of lapses that led to breaching anti-money laundering rules in the United States.
“There are, indeed, major deficiencies and shortcomings at the bank as pointed out by the DFS. As for the large volume of transactions in the past, we are still making inventory checks,” according to Mega Bank’s statement. (Reporting by Liang-sa Loh; Writing by J.R. Wu; Editing by Kenneth Maxwell)