The Financial Supervisory Commission (FSC) yesterday handed down punitive measures to Mega International Commercial Bank’s (兆豐銀行) New York branch after the New York State Department of Financial Services (DFS) last month announced a US$180 million fine of the branch for breaches of the US Bank Secrecy Act.

A probe of the New York branch’s oversight mechanism showed that Mega Bank also breached the Banking Act (銀行法), the commission said.

The commission fined Mega Bank NT$10 million (US$315,567) and ordered it to dismiss six high-level managers from their posts, including former Mega Financial Holding Co (兆豐金控) chairman Mckinney Tsai (蔡友才), who was stripped of his role as legal representative on the bank’s board.

The commission also ordered the dismissal of Mega Bank president Wu Hann-ching (吳漢卿), vice president Liang Mei-chi (梁美琪), chief audit officer Liu Hsiao-ling (劉小鈴) and chief compliance officer Chen Tien-lu (陳天祿), as well as Mega Bank New York branch president Huang Shih-ming (黃士明).

The commission barred all six from taking management positions at banking or financial institutions in the next five years and barred Mega Financial from opening additional overseas branches and offices until it has remedied its shortcomings in meeting compliance requirements, the commission said.

Whether the six would be subject to further punitive measures would be decided by Mega Financial, the commission said.

“Tsai had misrepresented himself in a letter to the DFS on March 24 that bore his signature, while the company’s board of directors told our investigators that they were not informed by Tsai,” FSC Vice Chairman Kuei Hsien-nung (桂先農) told a news conference in Taipei.

Apart from lapses in internal controls and conflicts of interest in the appointment of compliance staff, the branch also missed opportunities to communicate and appease the DFS in the months leading up to the fine, Kuei said.

The commission did not discuss reasons for the branch’s responses to DFS inquiries.

The branch said that it told US regulators that “irregular transactions” highlighted by the DFS “did not constitute suspicious activity.”

“In a situation where wire transfers to a closed bank account are returned to the sender, a regulatory filing is required in Taiwan. I cannot fathom why the same does not apply in the US,” Kuei said. “The investigation is aimed at finding out the truth, not the reasons and motives that led to this outcome.”

US regulators have slashed Mega International’s rating, which might lead to greater compliance costs and other complications abroad, he added.