Taiwan FSC Fines Yuanta Commercial Bank NT$4 Million Over Internal Control Failures

Taiwan's Financial Supervisory Commission (FSC) has imposed an administrative fine of NT$4 million on Yuanta Commercial Bank, citing violations of the Banking Act and weaknesses in the bank's internal audit and control framework. The penalty was announced on 14 May 2024 and stems from the discovery that a former employee in the bank's collections function had misappropriated repayments made by customers whose loans had been classed as bad debts, misconduct that Yuanta itself uncovered in an internal review.

The FSC's enforcement action cited violations of Article 45-1, Paragraph 1 of the Banking Act, which sets out obligations for credit institutions relating to the soundness of their internal governance. In addition, the regulator found breaches of Article 3, Paragraph 1 and Article 8, Paragraphs 1 and 3 of the Implementation Rules of Internal Audit and Internal Control System.

FSC FINDINGS

The misappropriation was carried out by a former member of Yuanta Commercial Bank's collections team, who diverted repayments from bad-debt customers, in part by giving customers a personal mobile number and personal bank account for their payments. According to the FSC, the former employee misappropriated about NT$2.88 million in repayments from 46 customers between January 2021 and September 2023, and the FSC found that the bank had not built adequate controls: a single collection officer handled every step of a case, from negotiating repayment plans and applying for write-off reductions to notifying customers of approved amounts and payment accounts, and there was no mechanism to confirm settlement terms with customers.

The FSC also found that the employee had bypassed the bank's existing collection procedures, showing that those procedures were not properly enforced.