Financial Supervisory Commission Disposition on Taiwan Cooperative Bank's Deficiencies in Credit Card Disputed Account Operations and Violations of Banking Act and Internal Control Regulations

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Regarding the deficiencies in Taiwan Cooperative Bank's handling of credit card disputed account operations, it was found to have violated Article 45-1, Paragraph 1 of the Banking Act and Article 3, Paragraph 1 and Article 8, Paragraph 1 of the 'Regulations Governing the Establishment of Internal Control and Audit Systems for Financial Holding Companies and Banking Enterprises' at the time of the act. In accordance with Article 129, Subparagraph 7 of the same Act, a fine of NT$12 million (hereinafter the same) is imposed. Additionally, in accordance with Article 61-1, Paragraph 1 of the same Act, a correction is ordered, and in accordance with Subparagraph 2 of the same paragraph, starting from the day following the delivery of this disposition, your bank is prohibited from accepting new customers for credit card business for 1 month. Business may resume only after the improvement situation is recognized by this Commission upon expiration.

2026-08-17

Financial Supervisory Commission Disposition

Recipient: As per original and copy

Issuance Date: August 17, 2026

Document No.: Jin Guan Yin Kong Zi No. 11502721972

Party Subject to Disposition: Taiwan Cooperative Bank Co., Ltd.

Business Uniform Number: 70799128

Address: No. 225, Section 2, Chang'an East Road, Songshan District, Taipei City

Name of Representative or Administrator: Mr. Lin XX

Address: Same as above

Subject: Regarding the deficiencies in your bank's handling of credit card disputed account operations, it was found to have violated Article 45-1, Paragraph 1 of the Banking Act and Article 3, Paragraph 1 and Article 8, Paragraph 1 of the 'Regulations Governing the Establishment of Internal Control and Audit Systems for Financial Holding Companies and Banking Enterprises' at the time of the act. In accordance with Article 129, Subparagraph 7 of the same Act, a fine of NT$12 million (hereinafter the same) is imposed. Additionally, in accordance with Article 61-1, Paragraph 1 of the same Act, a correction is ordered, and in accordance with Subparagraph 2 of the same paragraph, starting from the day following the delivery of this disposition, your bank is prohibited from accepting new customers for credit card business for 1 month. Business may resume only after the improvement situation is recognized by this Commission upon expiration.

Facts: When your bank accepted customer applications for credit card disputed account cases, it failed to promptly apply for refund requests with international credit card organizations, among other oversights, resulting in a loss of approximately NT$101.64 million for your bank. The deficiencies in this case indicate that your bank has not fully established and effectively implemented internal controls, and there is a risk of hindering sound operations.

Reasons and Legal Basis:

1. Legal Basis: Article 45-1, Paragraph 1 of the Banking Act and Article 3, Paragraph 1 and Article 8, Paragraph 1 of the 'Regulations Governing the Establishment of Internal Control and Audit Systems for Financial Holding Companies and Banking Enterprises' at the time of the act stipulate that banks shall establish internal control systems. Furthermore, in accordance with Article 129, Subparagraph 7 of the same Act, a bank that fails to establish or effectively implement an internal control system in accordance with Article 45-1 shall be subject to a fine of not less than NT$2 million and not more than NT$50 million. Moreover, Article 61-1, Paragraph 1 of the same Act stipulates that when a bank violates laws, regulations, or its articles of incorporation, or is deemed to be hindering sound operations, the competent authority may, in addition to ordering correction and requiring improvement within a specified period, impose sanctions such as suspending part of the bank's business, ordering the bank to dismiss managers or employees from their positions, and other necessary measures, depending on the severity of the circumstances.

2. Upon review, your bank has the following deficiencies:

(1) Failure to fully establish an internal control system:

1. Failure to fully establish credit card disputed account operation guidelines and related control mechanisms: Your bank failed to establish relevant business guidelines and internal control systems for the processing procedures, time limit control, and accounting treatment of credit card disputed account cases. Furthermore, for the processing of credit card disputed accounts, from system entry, progress tracking, to account reconciliation, all were handled by the same person, lacking the principle of checks and balances. It was difficult for supervisors at all levels to grasp individual cases and procedures, indicating that the relevant internal control system did not establish control and review mechanisms. For such account operations that require claims against the counterparty, the timeliness and accuracy should be strengthened. However, your bank failed to fully establish relevant control mechanisms, resulting in a loss of approximately NT$101.64 million in disputed accounts.

2. Failure to establish operating procedures and internal control systems for the preservation or destruction of disputed account documents: Review application forms, cardholder statements, transaction details, and other documents for disputed account cases from 2015 to 2011 were all destroyed between 2021 and 2024. However, some cases had not yet completed the disputed account operation procedures, making it impossible to clarify the actual processing situation.

3. Failure to establish an appropriate internal audit mechanism: Your bank's business unit did not establish business processes for handling disputed account cases, and the audit unit failed to discover this and did not establish audit work papers for key control items, effectively resulting in a situation where there was business but no internal audit system.

(2) Failure to effectively implement the internal control system:

1. Failure to effectively implement credit card accounting and account processing operations: Although your bank's internal control operation manual has stipulated key control points for credit card accounting operations, including regulations for account reconciliation and tracking management, in this case, the credit card system and the main accounting system accounts were not linked, unwritten-off detailed accounts were not cleared according to regulations, and supporting documents were not attached. Furthermore, your bank failed to effectively implement credit card accounting and account processing, leading to the failure to provision for bad debts and write off bad debts according to regulations, and account information was not clear and abnormalities were not clarified in a timely manner, indicating a failure to effectively implement credit card accounting and account processing operations.

2. Failure to effectively implement employee rotation operations: Your bank's established employee rotation implementation guidelines stipulate that job rotation must be for at least 6 months before returning to the original position. In this case, job rotation was merely a formality, and the supervising manager also failed to allocate appropriate personnel to handle the volume of disputed account cases, resulting in the inability to clarify account abnormalities in a timely manner.

3. The aforementioned deficiencies indicate that your bank has failed to fully establish and effectively implement an internal control system, in violation of Article 45-1, Paragraph 1 of the Banking Act and Article 3, Paragraph 1 and Article 8, Paragraph 1 of the 'Regulations Governing the Establishment of Internal Control and Audit Systems for Financial Holding Companies and Banking Enterprises' at the time of the act. Therefore, in accordance with Article 129, Subparagraph 7 of the Banking Act, a fine of NT$12 million is imposed. Additionally, in accordance with Article 61-1, Paragraph 1 of the same Act, a correction is ordered, and in accordance with Subparagraph 2 of the same paragraph, starting from the day following the delivery of this disposition, your bank is prohibited from accepting new customers for credit card business for 1 month. Business may resume only after the improvement situation is recognized by this Commission upon expiration.

Payment Method:

1. Payment Deadline: Payment shall be made within 10 days from the day following the delivery of this disposition.

2. Please make payment in accordance with the payment slip instructions provided by the Banking Bureau of this Commission.

Notes:

1. If the party subject to disposition disagrees with this disposition, it shall, within 30 days from the day following the delivery of this disposition, prepare a petition for administrative appeal in accordance with Article 58, Paragraph 1 of the Administrative Appeal Act and submit it to the Executive Yuan through this Commission (18F, No. 7, Section 2, Xianmin Blvd., Banqiao District, New Taipei City). However, in accordance with Article 93, Paragraph 1 of the Administrative Appeal Act, unless otherwise provided by law, the filing of an administrative appeal does not suspend the execution of this disposition, and the party subject to disposition shall still pay the fine.

2. If the party subject to disposition fails to pay the fine within the payment deadline stipulated in this disposition, the case shall be referred to the various branches of the Administrative Enforcement Agency of the Ministry of Justice for administrative enforcement in accordance with the proviso of Article 4, Paragraph 1 of the Administrative Enforcement Act.

Original: Taiwan Cooperative Bank Co., Ltd. (Representative Mr. Lin XX)

Copy: Taiwan Cooperative Financial Holding Co., Ltd. (Representative Mr. Lin XX), Central Bank, Central Deposit Insurance Corporation (Representative Mr. Huang XX), Inspection Bureau of this Commission, Banking Bureau

Page Views: 3

Update Date: 2026-08-17

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