Cathay United Bank fined NT$12 million for internal control lapses

Taipei,  Taiwan’s Financial Supervisory Commission (FSC) on Tuesday fined Cathay United Bank (國泰世華銀行) NT$12 million (US$422,982) after one of its financial advisors was found to have misappropriated NT$17.32 million from clients’ accounts.

FSC Banking Bureau Deputy Director-General Lin Chih-chi (林志吉) said the FSC handed out the fine following an investigation lasting several months after first receiving reports from Cathay United Bank in May about the alleged irregularity.

According to Lin, the bank found that an employee surnamed Hung (洪) at its Banqiao branch had misappropriated a large sum of money from four clients over a period of four-years-and-one-month; from March 2016 to March 2020.

In addition to imposing the fine for lapses in the bank’s internal control system, the FSC also suspended the bank’s Banqiao branch from operating insurance agent business for new clients and financial trust business for a period of one month.

The bank for its part said in a statement that it found the irregularity during a regular operations inspection and immediately reported the case to the FSC.

The bank has promised to implement reforms to prevent any re-occurrence in the future and pledged to safeguard the rights of customers affected by the misconduct, adding that it is in the process of taking legal action against the former employee.

According to Lin, Hung had access to client passwords and was therefore able to place redeeming funds and investments on their behalf without first seeking their consent.

The advisor embezzled money from the accounts of four clients and provided falsified money-transfer records so the clients did not notice any irregularities until April.

One of the clients reported missing funds to the bank that month, before the incident was uncovered.

Lin said the bank argued that its existing internal control system was able to identify such irregularities, but the mechanism did not apparently work in this case.

The latest fine is the sixth time the FSC has fined local banks this year over the misconduct of financial advisors.

So far this year the FSC has imposed fines totaling NT$72 million on E. Sun Commercial Bank (玉山銀行) (twice), Bank SinoPac (永豐銀行), Chang Hwa Commercial Bank (彰化銀行), Taishin International Bank (台新銀行) and Cathay United Bank.

The NT$72 million in fines is the most the FSC has ever imposed on banks in a year over such irregularities, topping last year’s NT$51 million, according to the FSC.

 

Source: Focus Taiwan News Channel

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