The impact of the Panama Papers data leak continues to be felt across multiple industries and organisations that were named and, in some cases, shamed as a result of transactions involving Panama. In addition to reminding firms to strengthen their internal anti-money laundering (AML) controls, the leak pushed many organisations into making sure that their broader compliance programmes were fully aligned with global laws and regulations.
One organisation is learning the hard way why it is so important to effectively manage transactional risks that involve jurisdictions – such as Panama – considered to be high risk for money laundering.
The New York branch of Mega Financial Holding, one of Taiwan’s largest financial institutions, has agreed to pay a US$180 million financial penalty to New York State’s financial regulator – the New York States Department of Financial Services (NYDFS) – for AML violations that included showing “indifference” to risk exposure in Panama.
The penalty represents the first time in 10 years that a Taiwan-based financial institution has been heavily penalized by authorities in the United States, according to Reuters.
The NYDFS probe discovered the existence of accounts that had connections or were established by Mossack Fonseca, the law firm at the centre of the Panama Papers scandal. Furthermore, suspicious transactions were found between the New York and Panama branches of the state-run bank, which allegedly failed to flag and prevent them from being processed.
As part of the settlement with the NYDFS, Mega International Commercial Bank of Taiwan (the New York branch) agreed to instruct a consultant and a monitor to ensure that it improves its AML compliance. The bank will be hoping that this helps to mitigate the reputational fallout from the scandal, which initially saw its share price drop by five percent following news of the financial penalty.