McKinney Tsai, ex-chairman of Mega International Commercial Bank, faces six charges in total, including accepting improper gains, money laundering, releasing false documents and insider trading.
He allegedly solicited investment from the company's credit clients to raise funds for his own asset management company, according to Taipei prosecutors.
They added Tsai made USD 7 million from investment service fees.
After Tsai left Mega International, he allegedly moved the funds to overseas bank accounts via Hong Kong between May and August this year, violating money laundering laws.
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But prosecutors said Tsai did not report the situation to board directors after receiving the US regulators' report earlier this year.
Prosecutors are seeking to have Tsai jailed for 12 years, and lesser sentences for two other alleged accomplices who were also indicted today.
"(Tsai) has served in the financial sector for a long time, deeply entrusted by the state... But he disregarded corporate governance and financial order for his own personal benefit," prosecutors said.
The head of Taiwan's top financial regulator resigned after US authorities fined the bank.
Mega International counts Taiwan's Ministry of Finance and the National Development Fund among its shareholders.
Mega International shares plummeted on the indictment.
The Panama Papers, which were released by media in April, comprised a trove of leaked documents that revealed a murky financial underworld of tax evasion by politicians, celebrities, and sports stars using shell companies.