American regulators last week said Taiwan’s Mega International Commercial Bank showed indifference towards transactions carried out through Panama, which it calls a “high-risk jurisdiction for money-laundering”.
The US Department of Financial Services (DFS) said it had identified “suspicious transactions” between Mega International’s New York and Panama Branches.
“DFS will not tolerate the flagrant disregard of anti-money laundering laws,” Financial Services Superintendent Maria T. Vullo said in a statement.
DFS said some of the bank’s customer accounts were formed with the help of Mossack Fonseca – the Panamanian law firm at the centre of a huge data dump in April this year.
A trove of leaked papers revealed murky offshore financial dealings that used shell companies to help politicians, celebrities and sports stars to skirt taxes.
Though offshore companies are not in themselves illegal, they can be used to engage in illegal activities such as tax evasion or money laundering.
Mossack Fonseca insists that it did nothing wrong.
Mega International, which counts Taiwan’s Ministry of Finance and the National Development Fund among its shareholders, agreed to fix an internal compliance system that the regulator called “a hollow shell”.
Taiwan’s Financial Supervisory Commission (FSC) said late Sunday it has formed a committee to investigate the case and ordered Taiwanese banks with overseas branches to tighten their anti-money laundering controls.
It added that the US order does not specify whether Mega International actually engaged in money laundering.
Shares in the bank’s parent company Mega Financial slumped 6.3 per cent in Taipei on Monday.
“The FSC will actively contact the New York DFS, and we have demanded Mega Bank to give an explanation as soon as possible,” the financial regulator said in a statement.
Of the bank’s $103 billion in assets, $9 billion is held at its New York branch, according to the DFS.