Financial Supervisory Commission Penalty Against Cathay United Bank for Employee Misappropriation and Internal Control Failures

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Regarding the case of a former employee of Cathay United Bank misappropriating client funds and privately retaining settlement overpayments, it is determined that there are violations of Article 45-1, Paragraph 1 of the Banking Act, and Articles 3, Paragraph 1, 8, Paragraph 1, and 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" in effect at the time of the act. Pursuant to Article 129, Item 7 of the Banking Act, a fine of New Taiwan Dollars (hereinafter the same) 8 million is imposed.

2026-06-30

Financial Supervisory Commission Penalty Decision

Addressee: As listed on the original and copy Date of Issue: June 30, 2026 (Republic of China Year 115) Document Number: Jin Guan Yin Kong Zi No. 11501330762 Respondent: Cathay United Bank Co., Ltd. Unified Business Number: 03742301 Address: No. 123, Songren Road, Xinyi District, Taipei City Legal Representative or Manager: Chen OO Address: Same as above

Subject: Regarding the case of a former employee of your bank misappropriating client funds and privately retaining settlement overpayments, it is determined that there are violations of Article 45-1, Paragraph 1 of the Banking Act, and Articles 3, Paragraph 1, 8, Paragraph 1, and 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" in effect at the time of the act. Pursuant to Article 129, Item 7 of the Banking Act, a fine of New Taiwan Dollars (hereinafter the same) 8 million is imposed.

Facts: Your bank has recently experienced successive instances of employees misappropriating client funds and privately retaining settlement overpayments at different branches, including former employee Cai of the Jisui Branch, former employee Liu of the Shilin Branch, and former employee Li of the Tainan Branch. The total amount misappropriated is New Taiwan Dollars (hereinafter the same) 4.6286 million. The deficiencies involved in the case indicate that your bank failed to properly establish an employee behavior management mechanism, deposit and remittance and foreign exchange system control and verification mechanisms, and failed to implement the internal control system.

Reasons and Legal Basis:

1. Article 45-1, Paragraph 1 of the Banking Act and Articles 3, Paragraph 1, 8, Paragraph 1, and 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" in effect at the time of the act stipulate that banks shall establish an internal control system. Additionally, Article 129, Item 7 of the Banking Act stipulates that if a bank fails to establish an internal control system in accordance with Article 45-1 or fails to implement it properly, a fine of not less than NT$2 million but not more than NT$50 million shall be imposed.

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

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

1. Failure to properly establish an effective mechanism for detecting abnormal employee behavior and early warning of risks: Your bank has established a "Control Mechanism for Abnormal Fund Transactions in Employee Accounts." The high-risk employees defined in this control mechanism refer to (1) employees who have been with the bank for less than 2 years, with an average balance of employee savings deposits below NT$100,000 for 3 consecutive months and a credit card revolving credit balance exceeding NT$100,000; or (2) those currently in debt negotiation repayment, or who have applied for negotiation but failed to fulfill it or the negotiation was not established, and whose average balance of employee savings deposits has been below NT$100,000 for 3 consecutive months or credit card revolving credit balance exceeds NT$100,000 for 6 consecutive months. Your bank stated that former employee Cai of the Jisui Branch had been with the bank for less than 2 years and was not subject to screening by this control mechanism; furthermore, former employee Li of the Tainan Branch had an average balance of employee savings deposits of NT$0 for the past half-year, but was not included in the "High-Risk Employee List" because he did not simultaneously meet the criteria of "high credit card revolving credit balance" or "debt negotiation and repayment." This indicates that the head office failed to establish an appropriate system for detecting abnormal transaction patterns and employee behavior monitoring, resulting in the failure to detect violations in a timely manner.

2. Failure to properly establish control and verification mechanisms for deposit/remittance and foreign exchange systems: The "Continuous Transaction Function Key" in your bank's deposit/remittance system only prints the voucher authentication column when executing multiple continuous transactions, without requiring the insertion of a passbook to print transaction records; additionally, the foreign exchange system's "Sell Foreign Currency Cash Transaction" allows selecting non-linked deduction without a passbook, followed by executing a foreign exchange supplementary posting transaction to deduct the account later. This indicates that your bank failed to establish appropriate system controls and verification mechanisms, leading to these deficiencies.

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

1. Failure to implement internal work rules and deposit/remittance related operational standards:

(1) Operational Standards: Your bank's "Work Rules" stipulate that employees shall not take advantage of their positions for personal gain or commit fraud; the "Accounting Practice Manual" and "Collection of Various Tax Fees Operation Flowchart" stipulate that employees should count cash box balances, perform cross-checking, and review vouchers to confirm account accuracy; the "Foreign Exchange Business Practice Manual" stipulates that the settlement of foreign remittances should be credited to accounts according to wire instructions.

(2) Upon investigation, former employee Cai privately stamped client seals, and former employee Li stole client seals and forged client signatures, violating the Work Rules; former employee Liu privately retained settlement overpayments without recording them according to regulations, and employee cross-confirmation and accountant settlement were merely formalities, with supervisors failing to implement further verification of accuracy; former employee Li, when handling the settlement of client foreign remittances, repeatedly altered the beneficiary's account number to credit his spouse's and friends' accounts. This indicates that the head office failed to properly supervise and manage employees to implement work rules and deposit/remittance related operational standards, resulting in multiple instances of fraud.

2. Supervisors failed to implement review control mechanisms: The supervisor review operations for deposit/remittance business and credit card payment business at your bank failed to properly verify whether the voucher authentication matched the amount written by the client, constituting negligence; additionally, supervisors for foreign exchange business repeatedly failed to verify discrepancies between the computer system and the reviewed remittance slips with stamps, yet approved the settlement transactions, failing to detect violations in a timely manner. This indicates that supervisors failed to properly review vouchers and foreign remittance settlement data.

3. Failure to promote employee integrity culture and moral behavior: Although your bank has established relevant regulations and control measures for employee behavior and included integrity culture topics in training courses, the occurrence of three involved employees misappropriating funds due to deviant behavior within a short period indicates that the Board of Directors and management level were insufficient in their efforts to implement employee integrity culture and moral behavior.

4. The above deficiencies indicate that your bank failed to properly establish and implement the internal control system, constituting violations of Article 45-1, Paragraph 1 of the Banking Act and Articles 3, Paragraph 1, 8, Paragraph 1, and 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" in effect at the time of the act. Therefore, pursuant to Article 129, Item 7 of the Banking Act, a fine of NT$8 million is imposed.

Payment Method:

1. Payment Deadline: Payment must be made within 10 days from the day following the service of this decision.
2. Please follow the payment instructions attached by the Banking Bureau of this Commission.

Notes:

1. If the respondent disagrees with this decision, they may file an appeal with the Administrative Yuan through this Commission (18th Floor, No. 7, Section 2, Xianmin Avenue, Banqiao District, New Taipei City) within 30 days from the day following the service of this decision, in accordance with Article 58, Paragraph 1 of the Administrative Appeal Act. However, pursuant to Article 93, Paragraph 1 of the Administrative Appeal Act, unless otherwise provided by law, filing an appeal does not suspend the execution of this decision, and the respondent must still pay the fine.
2. If the respondent fails to pay the fine within the payment period specified in this decision, the case will be transferred to the various branches of the Executive Yuan's Administrative Enforcement Agency for administrative enforcement, pursuant to the proviso of Article 4, Paragraph 1 of the Administrative Enforcement Act.

Original: Cathay United Bank Co., Ltd. (Representative: Ms. Chen OO) Copy: Cathay Financial Holding Co., Ltd. (Representative: Ms. Chen OO), Central Bank, Central Deposit Insurance Corporation (Representative: Mr. Huang OO), Inspection Bureau of this Commission, Banking Bureau

Number of Views: 1294 Last Updated: 2026-06-30

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