Taiwan's premier has ordered an investigation into Mega International Commercial Bank, one of the island's biggest banks, after US regulators fined its New York branch 180 million dollars for violating anti-money laundering laws.

The bank, which was formed by a merger of Chiaotung Bank and International Commercial Bank of China in the early 2000s, is about 20 per cent state-owned and has an estimated 103 billion dollars in assets.

Cabinet spokesman Tung Cheng-yuan told reporters on Monday that Prime Minister Lin Chuan had asked the cabinet-level Financial Services Commission a day earlier to set up a special task force to investigate.

Comprising officials from the finance and justice ministries and the central bank, it will "clarify the facts of the entire case and the possible responsibility of concerned Mega Bank personnel."

The commission held its first meeting on Monday afternoon, and its vice chairman, Kung Hsien-nung, told a news conference that it aimed to clarify "civil responsibility."

The issue of criminal responsibility for violating Taiwan's money laundering prevention laws "is a matter for prosecutors," Kung said.

On Friday, the Department of Financial Services in New York imposed a fine of 180 million dollars on Mega Bank and a requirement for two years of independent monitoring.

US regulators found that the "bank's head office was indifferent toward risks associated with transactions involving Panama, recognized as a high-risk jurisdiction for money-laundering," according to a statement on the department's website.

It further said that a number of suspicious transactions between Mega Bank's New York and Panama branches were identified, with links to the Mossack Fonseca law firm, one of the organizations "at the centre of shell company activity."

Mossack Fonseca was at the heart of the Panama Papers offshore accounts scandal in April with its massive leak of 11.5 million documents revealing how top politicians, sports stars and criminals hide their money using offshore tax havens.

In its 23-page report, the US department said Mega International and its New York branch failed to manage an effective anti-money laundering programme, maintain "true and accurate" accounts, immediately report discoveries of "fraud, dishonesty ... and other misconduct."

Meanwhile, no Mega representative attended the commission's meeting in Taiwan.

Vice chairman Kung said that the investigating team "does not exclude the possibility" of calling in former Mega Holding chairman Tsai You-tsai for questioning.

Kung said that "at present, we have not discovered any other overseas branches of Taiwan banks with problems like Mega."

"This case developed entirely under the previous Kuomintang (Chinese Nationalist Party or KMT) government, but it will reflect poorly on Taiwan's international reputation if the new government does not effectively resolve this scandal," Lo Chih-cheng, a legislator from the ruling Democratic Progressive Party (DPP), told dpa.

Lo added that "there is no reason why Taiwan taxpayers should pick up the tab."

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