(Corrects to say Chicago branch manager replaced voluntarily,
not at request of U.S. regulators)
TAIPEI, Sept 30 A U.S. state regulator has found
the Chicago banking branch of Taiwan's Mega Financial Holding Co
has not met required compliance controls, the
president of the Taiwanese financial firm told Reuters on
It is the second bank branch of the state-controlled firm to
run afoul of U.S. financial authorities, after its New York
branch was fined $180 million for lax compliance and anti-money
laundering violations in August.
Mega Financial, which has close ties to Taiwan's government,
has been under scrutiny since about 200 of its customers were
named in the so-called Panama Papers, a massive leak of
documents from a Panamanian law firm that put the spotlight on
the shadowy world of offshore companies used to avoid tax.
President Bruce L.Y. Yang said financial regulators had
uncovered problems with internal controls at the Chicago branch
of Mega International Commercial Bank, known as Mega Bank.
"The Chicago branch has to improve some deficiencies in
regulatory compliance," Yang said. He added that the branch
manager had been replaced, but it was unclear if the bank would
face a fine.
Mega Bank said in a statement on Saturday that local
regulators found deficiencies at the Chicago branch during a
regular annual inspection at the start of this year.
Mega Bank head office determined there were problems with
procedures and internal controls at the branch and voluntarily
replaced the Chicago branch manager in June, while urging the
branch to make improvements, the statement said.
The manager was not replaced at the request of the U.S.
regulators, it said.
Yang, the president of both the parent holding company and
the bank, one of Taiwan's biggest lenders, said its chairman,
Michael C.S. Chang, would travel to Chicago, New York and Canada
Terry Horstman, a spokesman for the Illinois state banking
regulator, whose jurisdiction includes Chicago, declined to
comment on whether the agency had examined or probed the bank.
"At this point in time, there is no public enforcement
action against Mega International Commercial Bank's branch in
Chicago by the Illinois Department of Financial & Professional
Regulation's banking division," Horstman said.
Chang told a news conference earlier this week that Mega
Bank's overseas branches were coming under greater scrutiny by
regulators abroad following critical lapses involving suspect
transactions between its New York and Panama branches.
Chang said the branches underwent annual inspections but
regulators, including those in the United States, Canada and
Panama, have become more stringent about them in the wake of the
fine the New York State Department of Financial Services slapped
on Mega's New York branch in August.
The New York regulator had found lax compliance and
anti-money laundering violations involving Panama transactions.
Mega Bank has branch offices in Los Angeles, Chicago and New
(Reporting by Liang-sa Loh; Additional reporting by Suzanne
Barlyn in New York; Writing by J.R. Wu; Editing by Alex