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FSC says it respects Panama's move to probe Mega Bank branch

2016/08/26 12:04:32

Taipei, Aug. 26 (CNA) Taiwan's Financial Supervisory Commission (FSC) said Friday that it respects a decision by the Panama government to launch an investigation into money laundering allegations against a branch of Mega International Commercial Bank (兆豐銀) there.

FSC Vice Chairman Kuei Hsien-nung (桂先農) told reporters that Panama has jurisdiction over banks operating within its territory and has decided to investigate the allegations in a bid to clear its reputation.

The FSC respects the move to probe the operations of Mega Bank, the flagship banking operations of Mega Financial Holding Co. (兆豐金), Kuei said.

On Aug. 19, the state of New York's Department of Financial Service (DFS) slapped a US$180 million fine on Mega Bank after identifying "a number of suspicious transactions" between its New York and Panama branches.

A DFS investigation found that "a substantial number" of entity customers had been formed with the assistance of the law firm Mossack Fonseca in Panama, which was linked to the Panama Papers scandal.

The Panama Papers refer to a batch of 11.5 million files from the database of the world's fourth-biggest offshore law firm Mossack Fonseca that detail efforts by moneyed interests around the world to set up offshore companies in tax havens.

The transactions in question in the Mega Bank New York branch took place in 2012 and were uncovered by the DFS during an examination conducted between January and March 2015.

The decision by the Superintendency of Banks of Panama (SBP) to probe the Mega Bank branch in Panama came after the DFS accused the Central American country of serving as a high risk jurisdiction for money laundering.

By conducting an investigation into the Mega bank matter, the SBP is seeking to disprove the DFS allegations and clear Panama's reputation, according to Kuei.

He said the SBP is fully within its rights and is not obliged to inform the FSC or any other Taiwanese authority about the investigation.

On Thursday, Premier Lin Chuan (林全) asked the FSC to start an immediate examination of Mega Bank's New York and Panama branches and he gave a directive for the establishment of two separate task forces by the FSC and the Ministry of Justice (MOJ) to investigate the case.

The FSC said it will send a delegation to New York and Panama next week to examine the operations of the two branches of Mega Bank there.

FSC Chairman Ding Kung-wha (丁克華) said that until Mega Bank resolves the problems associated with the allegations of money laundering, it will be barred from opening any new branches overseas.

According to the justice ministry, Taiwan's rating by the Asia/Pacific Group on Money Laundering (APG) could be hurt if Mega Bank is found to have violated U.S. laundering laws.

(By Tsai Yi-chu and Frances Huang)
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