Financial Supervisory Commission Penalty Against China Trust Commercial Bank for Internal Control Failures

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The missing links involving the former employee of the Personal Banking Centralized Operations Department of China Trust Commercial Bank who misappropriated the bank's ATM clearing funds and financial clearing funds constitute 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, Clause 7 of the Banking Act, a fine of New Taiwan Dollars (hereinafter the same) 4,000,000 is imposed.

2026-07-13

Financial Supervisory Commission Penalty Decision

Addressee: As listed on the original and copy Date of Issue: July 13, 2026 (Republic of China Year 115) Document Number: Jin Guan Yin Kong Zi No. 11502716662 Penalized Party: China Trust Commercial Bank Co., Ltd. Unified Business Number: 03077208 Address: Nos. 166, 168, 170, 186, 188, Jingmao 2nd Road, Nangang District, Taipei City Representative or Manager: Mr. Chen [Redacted] Address: Same as above

Subject: The missing links involving the former employee of the Personal Banking Centralized Operations Department of China Trust Commercial Bank who misappropriated the bank's ATM clearing funds and financial clearing funds constitute 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, Clause 7 of the Banking Act, a fine of New Taiwan Dollars (hereinafter the same) 4,000,000 is imposed.

Facts: Mr. Liao, a former employee of the Personal Banking Centralized Operations Department of the bank, misappropriated the bank's ATM clearing funds and financial clearing funds from November 2024 to August 2025, involving an amount of approximately NT$2,970,000. The duration of the illegal act was approximately 10 months. The missing links involved in the case indicate that the bank failed to properly establish and execute its internal control system.

Reasons and Legal Basis:

1. Legal Basis: Pursuant to 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, banks shall establish an internal control system and ensure that the system is continuously and effectively executed. The internal control system shall cover all operational activities, and bank business regulations and handling manuals shall additionally include management of operations such as cashiering, deposits, and remittances. Furthermore, pursuant to Article 129, Clause 7 of the Banking Act, a bank that fails to establish an internal control system in accordance with Article 45-1 or fails to execute it properly shall be fined between NT$2,000,000 and NT$50,000,000.

2. The bank was found to have the following missing links:

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

1. Failure to properly establish a control mechanism for the return of clearing funds to customers marked as "No Anomalies Found and No Customer Complaints" with long aging: The clearing funds misappropriated by Mr. Liao in this case were all clearing funds marked as "No Anomalies Found and No Customer Complaints" with an aging period of over 2 years, and all were below a certain amount. Therefore, the return operation did not require item-by-item review by supervisors but was conducted via sampling. Given that the reasons and recipients for the return of the clearing funds in question could not be determined for a long period, the subsequent return operations for such funds should have strengthened the confirmation of their rationality and accuracy. However, the bank failed to properly establish relevant control mechanisms for the return operation of the clearing funds in question, leading to the improper misappropriation of clearing funds by Mr. Liao.

2. Failure to properly establish a control mechanism for abnormal concentration in the return of clearing funds to customers: The clearing funds misappropriated by Mr. Liao over 10 consecutive months were ultimately transferred to Mr. Liao's deposit account at the same bank. The concentration of the return of clearing funds during this period was obviously abnormal. However, the bank failed to properly establish relevant control mechanisms to facilitate the discovery of the abnormal concentration of returned clearing funds into Mr. Liao's deposit account.

(2) Failure to properly execute the internal control system (failure to properly execute the sampling and review mechanism for the return of clearing funds below a certain amount to customers): The bank had established a mechanism for supervisors to sample and review a certain proportion of cases daily for the return of clearing funds below a certain amount to customers (without requiring item-by-item review by supervisors). Although supervisors stamped the sampling and review reports, they failed to leave traces or proof of the execution of relevant sampling and review operations to facilitate subsequent tracing and confirmation that the operations were completed properly. This constitutes a failure to properly execute the sampling and review mechanism.

3. The aforementioned missing links indicate that the bank failed to properly establish and execute its 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, a fine of NT$4,000,000 is imposed pursuant to Article 129, Clause 7 of the Banking Act.

Payment Method:

1. Payment Deadline: Payment shall 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 penalized party disagrees with this decision, they shall, within 30 days from the day following the service of this decision, prepare an appeal petition in accordance with Article 58, Paragraph 1 of the Administrative Appeal Act and file an appeal with the Executive Yuan via this Commission (18th Floor, No. 7, Section 2, Xianmin Avenue, Banqiao District, New Taipei City). However, pursuant to Article 93, Paragraph 1 of the Administrative Appeal Act, unless otherwise provided by law, the filing of an appeal does not suspend the execution of this decision. The penalized party shall still pay the fine.
2. If the penalized party fails to pay the fine within the payment deadline specified in this decision, the case shall be transferred to the various branches of the Administrative Enforcement Office of the Ministry of Justice for administrative enforcement, pursuant to the proviso of Article 4, Paragraph 1 of the Administrative Enforcement Act.

Original: China Trust Commercial Bank Co., Ltd. (Representative: Mr. Chen [Redacted]) Copy: China Trust Financial Holding Co., Ltd. (Representative: Mr. Yan [Redacted]), Central Bank, Central Deposit Insurance Corporation (Representative: Mr. Huang [Redacted]), Inspection Bureau of this Commission, Banking Bureau

Update Date: 2026-07-14

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Update Date: 2026-07-14

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