Taiwan Land Bank Salu Branch Former Employee Misappropriation Fine

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The deficiencies involved in the former employee of Taiwan Land Bank Co., Ltd. Salu Branch misappropriating public funds constitute a violation of Article 45-1, Paragraph 1 of the Bank Act. Pursuant to Article 129, Paragraph 7 of the same Act, a fine of New Taiwan Dollars (hereinafter the same) 4,000,000 is imposed.

2025-04-25

Financial Supervisory Commission
Penalty Decision

Addressee: As listed in the original and copy
Date of Issue: April 25, 2025 (Republic of China Year 114) Document Number: Jin Guan Yin Guo Zi No. 11402709092 Person Subject to Penalty: Taiwan Land Bank Co., Ltd.
Unified Business Number: 03700301
Address: No. 46, Guanqian Road, Zhongzheng District, Taipei City Representative or Manager Name: He OO Address: Same as above

Subject: The deficiencies involved in the former employee of your bank's Salu Branch misappropriating public funds constitute a violation of Article 45-1, Paragraph 1 of the Bank Act. Pursuant to Article 129, Paragraph 7 of the same Act, a fine of New Taiwan Dollars (hereinafter the same) 4,000,000 is imposed.

Facts: Your bank's former employee, Chen OO (hereinafter referred to as "Chen"), took advantage of his position between 2017 (Republic of China Year 106) and April 2024 (Republic of China Year 113) to commingle water and electricity fees collected from tenants with personal belongings to misappropriate public funds, and notified tenants of incorrect allocated amounts, resulting in short collections. The total amount involved was NT$2,712,384. The deficiencies in the case indicate that your bank failed to properly establish and effectively execute its internal control system.

Reasons and Legal Basis:

1. Article 45-1, Paragraph 1 of the Bank Act and its delegated "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" Articles 3 and 8, Paragraph 1 stipulate that banks shall establish an internal control system, including general affairs management. Furthermore, pursuant to Article 129, Paragraph 7 of the Bank Act, banks that fail to establish an internal control system in accordance with Article 45-1 or fail to execute it effectively shall be fined between NT$2,000,000 and NT$50,000,000.

2. Upon review, your bank's management of the leasing of its own premises has the following deficiencies:

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

1. Failure to explicitly stipulate the principle prohibiting workers from performing duties beyond their scope in relevant operational regulations: Article 4 of your bank's "Worker Management Precautions" stipulates the establishment of workers, who are configured to serve as drivers for official vehicles, staff meal providers, and handlers of various general affairs tasks according to the needs of each unit. Although your bank strictly prohibits workers from performing duties beyond their scope through annual circulars, it has not explicitly stipulated in relevant regulations that workers shall not handle the receipt and payment of various funds.
2. Failure to properly establish accounting procedures for expense allocation: When branches pay the full amount of water and electricity fees, they are recorded under expense accounts. When collecting allocated fees from tenants, the cash is directly used to offset water and electricity fees without recording it under "Other Payables" upon receipt, in accordance with accounting principles. Additionally, no effective control mechanism was established for crediting expense accounts, causing this method of handling tenants' water and electricity fee allocations to be used not only in the Salu Branch but also in 5 other branches, including Hsinchu.
3. Failure to establish relevant control mechanisms for the leasing of own premises: Your bank has 29 leased units, but no relevant management regulations and audit mechanisms were formulated for the management of leased premises, expense allocation, and the withdrawal from special accounts. This allowed Chen to misappropriate funds for a long period without being discovered.

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

1. Failure to implement review procedures for transactions involved in the case: Your bank and tenants agreed in the lease contract on matters both parties must follow, including tenants transferring (depositing) allocated water and electricity fees via transfer or cash into a special account opened by the branch upon receiving the rent invoice and the branch's calculation of the allocation amount notice. However, the branch did not produce an allocation detail sheet for the water and electricity fees to be collected from tenants each period, nor was it signed and reviewed by relevant personnel. This resulted in discrepancies between the collected allocation fee ratio and the agreed ratio.
2. Failure to implement your bank's "Real Estate Lease, Sale, and Management Collection Special Account Management Rules" (hereinafter referred to as "Special Account Management Rules") to withdraw funds from the special account via passbook transfer: According to Point 5 of your bank's "Special Account Management Rules," the special account seals should be kept by authorized signatories from Group A and Group B, and funds should be withdrawn via passbook transfer. However, Chen withdrew cash using a "temporary deposit/withdrawal" method, and Chen presented withdrawal slips pre-stamped by the managing supervisor. The operational process did not implement review procedures, resulting in the failure to discover that some withdrawals were not signed by all authorized personnel.

(3) The above deficiencies indicate that your bank failed to properly establish and effectively execute its internal control system, constituting a violation of Article 45-1, Paragraph 1 of the Bank Act and Articles 3 and 8, Paragraph 1 of the "Implementation Measures for Internal Control and Audit Systems of Financial Holding Companies and Banks" delegated under that article. Therefore, pursuant to Article 129, Paragraph 7 of the Bank Act, a fine of NT$4,000,000 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.

Precautions:

1. If the person subject to penalty disagrees with this decision, they must, within 30 days from the day following the service of this decision, prepare an appeal petition pursuant to Article 58, Paragraph 1 of the Administrative Appeal Act and submit it to 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, filing an appeal does not suspend the execution of this decision, and the person subject to penalty must still pay the fine.
2. If the person subject to penalty 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, pursuant to the proviso of Article 4, Paragraph 1 of the Administrative Enforcement Act.

Original: Taiwan Land Bank Co., Ltd. (Representative: Mr. He OO) Copy: Central Bank, Ministry of Finance, Central Deposit Insurance Corporation (Representative: Mr. Huang OO), Examination Bureau of this Commission, Banking Bureau

Number of Views: 27524

Last Updated: 2025-04-25

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