Taiwan’s Financial Supervisory Commission will enact new anti-money laundering rules on Nov. 30, a month earlier than it had initially planned, as the regulator charges ahead with its fraud prevention efforts.
The new rules require crypto service providers, such as crypto exchanges, to complete AML compliance registration. Non-compliance may lead to penalties, including imprisonment for up to two years and a fine of up to NT$5 million ($153,700).
The FSC said in a statement on Wednesday that overseas “virtual asset service providers” (VASPs) must establish a company or branch office under Taiwan’s Company Act and complete the required AML registration before conducting operations within Taiwan. The regulator introduced these new regulations following amendments made to the laws in July.
Jin-Lung Peng, chair of the FSC, said during a parliamentary session in October that the decision to fast-track the AML system was made in response to urgent societal demands for stronger fraud prevention measures. Peng added that the VASP registration system is part of a broader legal framework aimed at combating fraud.
Earlier this month, Hsi-Ho Huang, director of the securities firms division of the FSC, said at a conference in Taipei that with the new rules set to take effect soon, the regulator aims to tighten scrutiny on key areas, including custody of fiat currency, information security, customer complaint handling procedures, record keeping and information disclosure.
Huang noted that crypto trading platforms must establish clear procedures for listing and delisting crypto assets, and take measures to prevent unfair trading and detect abnormal price and volume.
“The new law imposes stricter regulatory oversight for existing VASPs,” Kevin Cheng, a crypto lawyer and secretary general of the Taiwan Fintech Association, told The Block. “The new rules require companies to fulfill additional obligations beyond anti-money laundering measures, such as administrative reporting, information security, and consumer protection.”
Cheng also pointed out that the new regulations offer stronger and more comprehensive tools for law enforcement authorities to tackle previously challenging criminal activities.
Taiwan has also taken steps to address non-compliance among existing VASPs. On Monday, MaiCoin and BitoPro — both major local crypto exchanges in Taiwan — have each been fined NT$1.5 million ($) for violating AML regulations.
The FSC said that the two exchanges failed to enhance customer due diligence, had insufficient understanding of customers' sources of wealth, maintained inadequate record-keeping of transaction data, and were unable to effectively identify suspicious transaction patterns.
In response, MaiCoin said that it would immediately address the deficiencies identified by the FSC to “uphold the principle of protecting user assets and ensure normal business operations.”
BitoPro said that it has assembled a dedicated task force to address the identified deficiencies pointed out by the FSC. “Concrete improvement plans have been implemented, including stricter internal audit and control procedures, enhanced employee training programs, and efforts to raise compliance awareness across the organization,” BitoPro added.
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