TAIPEI: The former head of a Taiwanese bank linked to the Panama Papers and his top aide have been detained on suspicion of violating banking and securities laws, officials said Wednesday.
Mckinney Tsai, ex-chairman of Mega International Commercial Bank, was arrested and taken into custody early Wednesday on suspicion of insider trading, the Taipei district prosecutor’s office said.
Tsai offloaded stocks ahead of the bank being fined $180 million by US regulators in August, according to Apple Daily, citing unnamed sources.
Regulators hit the bank with the fine over “suspicious transactions” between its New York and Panama branches.
Taipei prosecutor Chiang Chieh-chin confirmed Tsai had been arrested for “trading stocks before major news came out”, without elaborating.
He was also accused of violating banking laws and breach of trust for failing to fulfil his duties as head of Mega Bank in connection with the US fine, added Chiang, again giving no further details.
The Panama Papers, which were released by media in April, comprised a trove of leaked documents that revealed a murky financial underworld of tax evasion by politicians, celebrities, and sports stars using shell companies.
Mega Bank had dealings with a Panamanian law firm at the center of the scandal, the US Department of Financial Services said.
The US order did not specify whether the Taiwanese bank actually engaged in money laundering.
Tsai’s top aide Wang Chi-pang was also detained on suspicion of violating banking and securities laws.
Tsai and Wang are the first Mega officials to be held after the scandal surfaced, as a district court ruled that they could collude with witnesses or destroy evidence.
Taiwan’s Financial Supervisory Commission (FSC) last month ordered the removal of six Mega Bank executives including Tsai and barred it from opening overseas branches.
Despite being aware late last year of US regulatory concerns, the bank did not do enough to improve its anti-money laundering controls, the FSC said.
The Mega bank scandal also brought down FSC chairman Ding Kung-wha, who was criticized for being slow in handling the case.
Taiwan’s cabinet passed a bill to toughen its anti-money laundering laws following Mega Bank’s fine. AFP