Financial Crime World

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Financial Watchdog Fines Citibank and DBS Taiwan for AML/CFT Lapses

The Financial Supervisory Commission (FSC) of Taiwan has announced penalties against Citibank Taiwan Limited and DBS Bank (Taiwan) Ltd. for breaches of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations.

Background

In targeted examinations and full- scope inspections carried out between 2017 and 2019 for Citibank, and between 2017 and 2018 for DBS Bank, it was found that both banks failed to adequately institute their internal AML/CFT control mechanisms and processes. This non-compliance was confirmed in violation of Paragraph 1 of Article 45-1 of the Banking Act of the Republic of China.

Citibank Taiwan Limited

Citibank, the subject of the penalty notice dated May 13, 2021, was found to have not established an effective customer risk assessment mechanism. The bank did not properly assess clients in various sectors using appropriate risk indicators such as industry category and location. Additionally:

  • Due diligence on numerous one-person offshore companies with the same contact details and registration origin was insufficient along with their rapid account openings.
  • Lapses continued in Citibank’s ongoing customer due diligence process, transaction monitoring, and customer due diligence implementation.

Enforcement Action

Citibank was fined NT$10 million for significant deficiencies in its AML/CFT operations, including:

  • Ineffective risk assessment mechanisms
  • Insufficient customer due diligence and transaction monitoring
  • Failure to complete investigations of suspicious transactions on time

DBS Bank (Taiwan) Ltd.

DBS Bank, also the recipient of a penalty notice dated May 13, 2021, had similar shortcomings. The bank was found to lack:

  • Proper ongoing customer due diligence
  • Name screening mechanisms for customers and related parties of transactions
  • An effective transaction monitoring mechanism

Enforcement Action

DBS Bank was fined NT$6 million for its significant deficiencies in AML/CFT operations, including:

  • Ineffective ongoing customer due diligence
  • Insufficient implementation of customer due diligence
  • Incomplete investigations of suspicious transactions

Conclusion

The FSC emphasized that AML/CFT regulations are essential for worldwide compliance and a necessary requirement for Taiwan’s financial sector. Both international and local financial institutions must adhere to local laws and regulations, take local risk profiles into account, and commit resources to ensure ongoing monitoring and review of their AML/CFT control mechanisms. Such sustained efforts are vital for maintaining well-functioning internal control systems and implementing effective AML/CFT measures, thereby upholding the integrity of the financial market and safeguarding the stability of the financial industry.