Taichung Bank Fined Record NT$32 Million for Internal Control Failures Aiding Fraud Ring

The Financial Supervisory Commission (FSC) announced today that it has imposed a record fine of NT$32 million on Taichung Bank for significant internal control failures that allowed a fraud syndicate to launder over NT$3.6 billion. This penalty is the highest ever levied on a banking institution in Taiwan.

An investigation by the Taichung District Prosecutors Office revealed that Hong Yue-peng, the head of Wanli Development Company, colluded with six Taichung Bank employees, including managers and assistant managers, to open corporate accounts for gambling and fraud groups, facilitating the laundering of more than NT$3.6 billion.

The FSC stated that Taichung Bank failed to adequately establish and implement internal control systems concerning deposit account opening, customer due diligence, and account monitoring mechanisms. Consequently, the bank has been ordered to conduct a thorough review and develop improvement plans.

Tong Cheng-chang, Director-General of the FSC's Banking Bureau, explained at a press conference today that the investigation found deficiencies across 10 Taichung Bank branches, including Tanzhi, Zhongzheng, Beitun, Toufen, Yuanlin, Dounan, West Taichung, Taipei, Zuoying, and Wufeng. From April 2024, these branches handled the opening of deposit accounts for 21 corporate clients. The bank lacked proper review mechanisms for customer identification and online banking limits. Furthermore, there were multiple shortcomings in subsequent customer due diligence, monitoring and verification of abnormal transactions, and reporting of suspected money laundering activities, indicating a failure to adequately establish and enforce internal control systems.

Tong Cheng-chang noted that because the bank's actions violated multiple administrative obligations, the penalty was determined based on the highest applicable fine amount, resulting in the NT$32 million penalty. (Editor: Pan Yi-ching) 1150512