Mega Bank Annual Report 2017

70 Mega Bank -70- (29) Loss on asset impairment For the year ended December 31 2017 2016 NT$ US$ NT$ Equity investments carried at cost $ 92,028 $ 3,104 $ 308,670 Available-for-sale-financial assets 137,760 4,647 103,340 Gain on reversal of impairment loss on property and equipment ( 24,609 ) ( 830 ) ( 77,613 ) Total $ 205,179 $ 6,920 $ 334,397 (30) Other revenue other than interest income For the year ended December 31 2017 2016 NT$ US$ NT$ Net income from rent $ 181,150 $ 6,110 $ 186,847 Gain on sale of non-performing loans 53,117 1,792 40,508 Gain on sales of property and equipment 1,262 42 1,142 Casualty loss - - ( 82 ) Loss on retirement of assets ( 32 ) ( 1 ) ( 253 ) Total $ 235,497 $ 7,943 $ 228,162 (31) Net other miscellaneous loss (income) For the years ended December 31 2017 2016 NT$ US$ NT$ Penalty paid to New York State Department of Financial Services (Note 1) $ - $ - ( $ 5,797,854 ) Penalty paid to United Fed (Note 2) ( 878,506 ) ( 29,631 ) - Other revenue 150,152 5,064 298,860 Total ( $ 728,354 ) ( $ 24,567 ) ( $ 5,498,994 ) Note 1: The New York State Department of Financial Services (NYDFS) fined the Bank and Mega New York Branch for failing to comply with Bank Secrecy Act (BSA) anti-money laundering laws (AML). The fine was part of a consent order entered into with the NYDFS pursuant to which the Bank and Mega New York Branch shall take immediate steps to correct the non-compliance. According to the consent order, the Bank and Mega New York Branch shall engage an independent compliance con sultant of NYDFS’ selection for six months to immediately consult about, oversee and address deficiencies in Mega New York Branch’s compliance function, including compliance with BSA/AML requirements. In addition, the Bank and Mega New York Branch shall retain an independent monitor to conduct a comprehensive review of the effectiveness of the Branch's program for compliance with BSA/AML requirements, laws and regulations and prepare a written report of findings, conclusions, and recommendations. The independent monitor shall also conduct a review of Mega New York Branch’s U.S. dollar clearing transaction activity from January 1, 2012 through December 31, 2014, to determine whether transactions are inconsistent with or in violation of the OFAC Regulations. As of the reporting date of these financial statements, the Bank and Mega New York Branch have been overseen and consulting with the compliance consultant during the stipulated term of six months. Currently, the Mega New York Branch is conducting a comprehensive review of effective compliance with BAS/AML requirements, laws and regulations by the independent monitor whereas a review of U.S. dollar clearing transaction activity has not commenced yet. Subsequently, on May 22, 2017, a press release announced by the Taipei District Prosecutors Office (TDPO) with respect to the investigation result of the Bank’s suspicious money laundering activities indicated no evidence was found that the Bank’s rel ated member and citizen is involved in any money laundering. As for Jin-Guan-Jian-Kong-Zi Letter No.1060152046 on February 6, 2017, there was no evidence that is related to suspicious money laundering transaction. As the Bank and Mega New York Branch adopted the improvement process, internal member and independent external third party found that some transactions might cause disputes over compliance issues and result in the payment of economic resources. As of the reporting date, the definite amount of penalty depends on the adjudicative body. Note 2: Following the most recent examination of the Mega New York Branch, the Mega Chicago Branch and the Mega Silicon Valley Branch (collectively , the “Branches”) of June 30, 2016, December 31, 2016, and September 30, 2016, the supervisory authorities disclosed deficiencies relating to the Branches’ risk management and compliance with the BSA/AML requirements. Therefore, on January 17 , 2018, the bank, the Branches, the Board of Governors of the Federal Reserve System (FED) and the Illinois Department of Financial and Professional Regulation (IDFPR), Division of Banking entered into a consent Order to Cease and Desist and Order of Assessment of a Civil Money Penalty. The FED and IDFPR fined a $29 million penalty against the U.S. operations of the Bank and the Branches. According to the Order, the Bank ’s Board of Directors and the respective management of each of the Branches shall jointly submit an in dividual written plan aiming to enhance the Bank’s and the respective Branch's management’s oversight of the respective Branch’s compliance with the BSA/AML requirements and the OFAC regulations on a consolidated basis. Each plan shall provide for a sustainable governance framework that addresses an enhanced BSA/AML compliance program, a revised program for conducting appropriate levels of customer due diligence, an enhanced program reasonably designed for suspicious activity monitoring and reporting and a plan to ensure compliance with the OFAC regulations. Additionally, the Bank and Mega New York Branch shall engage an independent third party acceptable to the Federal Reserve Bank of New York to conduct a review of the Mega New York Branch ’s U.S. dollar cl earing transaction activity from January 1, 2015 to June 30, 2015 to determine whether suspicious activity involving higher risk customers were properly identified and reported. The Order acknowledged that the Bank has undertaken