Shanghai Commercial Savings Bank Fined 12 Million NTD for Internal Control Failures and Employee Misconduct

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In the case of the former employee of Shanghai Commercial Savings Bank misappropriating funds and deficiencies in the management mechanism for abnormal employee behavior, it is determined that there are violations of Article 45-1, Paragraph 1 of the Bank Act and Articles 3, Paragraph 1, Article 8, Paragraph 1, and Article 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" promulgated under its authorization. Pursuant to Article 129, Paragraph 7 of the Bank Act, a fine of New Taiwan Dollars (hereinafter the same) 12,000,000 is imposed.

2025-12-31

Financial Supervisory Commission

Penalty Decision

Addressee: As per original and copy Date of Issue: December 31, 2025 (Republic of China Year 114) Document Number: Jin Guan Yin Guo Zi No. 11402743122 Respondent: Shanghai Commercial Savings Bank Co., Ltd. Unified Business Number: 03036306 Address: No. 2, Section 1, Minquan East Road, Zhongshan District, Taipei City Legal Representative or Manager: Li OO Address: Same as above

Subject: In the case of the former employee of your bank misappropriating funds and deficiencies in the management mechanism for abnormal employee behavior, it is determined that there are violations of Article 45-1, Paragraph 1 of the Bank Act and Articles 3, Paragraph 1, Article 8, Paragraph 1, and Article 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" promulgated under its authorization. Pursuant to Article 129, Paragraph 7 of the Bank Act, a fine of New Taiwan Dollars (hereinafter the same) 12,000,000 is imposed.

Facts: Your bank has recently experienced multiple instances of employees misappropriating customer funds or public funds across different branches (units). These include Chen OO, former Operations Management Supervisor of the Digital Finance Business Department; Hao OO, former employee of Dunbei Branch; Lin OO, former employee of the Savings Department; and Liao OO, former employee of Sanmin Branch. The total amount misappropriated is 25,600,000 NTD. The deficiencies involved in these cases indicate that your bank failed to adequately establish mechanisms for customer data changes and employee behavior management, and failed to implement internal control systems.

Reasons and Legal Basis:

1. Article 45-1, Paragraph 1 of the Bank Act and Articles 3, Paragraph 1, Article 8, Paragraph 1, and Article 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" promulgated under its authorization stipulate that banks shall establish internal control systems. Furthermore, pursuant to Article 129, Paragraph 7 of the Bank Act, banks that fail to establish internal control systems in accordance with Article 45-1 or fail to implement them properly shall be fined between 2,000,000 and 50,000,000 NTD.

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

(1) Failure to adequately establish internal control systems:

1. Failure to adequately establish effective mechanisms for detecting abnormal employee behavior and early risk warning: The four cases reveal that abnormal employee behavior (all involving fund misappropriation) was not detected and handled in a timely manner. Examples include: (1) Long-term large-scale transfers of customer deposits to employee accounts, and frequent fund flows between employee accounts and specific accounts; (2) Delays in depositing funds collected outside the bank, often resulting in temporary shortages; (3) In the teller cash recount and end-of-day settlement processes, instances occurred where the recount personnel's official seal was misused, and cash was stolen after recounting. The Head Office failed to establish an appropriate system for detecting abnormal transaction patterns and an employee behavior monitoring system, resulting in the inability to detect violations in a timely manner.

2. Failure to adequately establish authority control and customer data change verification mechanisms: Employees utilized computer systems where authorized personnel had not logged out to change customer data. This indicates that control mechanisms such as "forced logout" and "blocking non-personal operations" are insufficient. Additionally, there is no relevant verification mechanism for customer data changes to confirm whether changes were applied by the customer or by employees.

(2) Failure to properly execute internal control systems:

1. Although your bank has established relevant operational regulations, they were not implemented or effectively enforced: Examples include: (1) The procedure for personal signatures and identity verification was not implemented (for additional loans, credit agreements, collecting payments outside the bank, etc.); (2) Sensitive operations such as mailing statements and changing customer contact information did not implement a dual-review mechanism; (3) Although regulations exist for field operations, receiving payments at the counter, teller recounts, and end-of-day settlements, there were multiple instances where supervisors failed to verify transaction details, failed to inspect field logs, and failed to follow supervision and review processes. The Head Office's failure to promptly detect the aforementioned continuous deficiencies indicates insufficient depth and breadth in branch management.

2. Failure to implement review operations for account transaction monitoring: In one of the cases, the involved employee had 14 transactions meeting the indicators of money laundering. Although your bank conducted reviews as required, it did not investigate starting from the source of funds account. Instead, it directly concluded that there were no abnormalities based on fund transfers between the employee's personal accounts, transaction amounts matching the individual's background, and reasonable sources of funds. This constitutes a failure to implement review operations for account transactions.

3. Failure to promote employee integrity culture and ethical behavior:

(1) Failure to implement employee life assessments and ignore compliance norms: The handler did not execute the personal signature procedure because they believed the employee and the customer were relatives. The reviewer, trusting the employee, failed to implement relevant review operations for transactions handled by the employee, leading to loose branch discipline.

(2) Although your bank has established relevant regulations and control measures for employee behavior, and has included integrity culture topics in training courses, the four involved employees in this case misappropriated funds due to factors such as private investment losses, high-interest loan pressures, or cash flow difficulties. This clearly shows that the Board of Directors and management layer were insufficient in their efforts to implement employee integrity culture and ethical behavior.

3. The aforementioned deficiencies indicate that your bank failed to adequately establish and properly execute internal control systems, constituting violations of Article 45-1, Paragraph 1 of the Bank Act and Articles 3, Paragraph 1, Article 8, Paragraph 1, and Article 8, Paragraph 3 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" promulgated under its authorization. Therefore, pursuant to Article 129, Paragraph 7 of the Bank Act, a fine of 12,000,000 NTD 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 to the payment slip provided by the Banking Bureau of this Commission.

Notes:

1. If the respondent disagrees with this decision, they may file an administrative appeal with the Executive 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 administrative appeal does not suspend the execution of this decision. The respondent must still pay the fine.
2. If the respondent fails to pay the fine within the payment deadline specified in this decision, the case will be transferred to the various sub-bureaus 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: Shanghai Commercial Savings Bank Co., Ltd. (Representative: Mr. Li OO) Copy: Central Bank, Central Deposit Insurance Corporation (Representative: Mr. Huang OO), Inspection Bureau of this Commission, Banking Bureau

Page Views: 12747

Last Updated: 2025-12-31

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