what happen?

  • The Taiwan Financial Supervisory Commission will strengthen inspections of virtual asset service providers (VASPs) in 2023, and announced on November 25, 2024 that it will fine Modern Wealth Technology Co., Ltd. (MaiCoin) and Bito Technology Co., Ltd. each NT$1.5 million. Taiwan dollar.

  • The main reasons include incomplete customer review, insufficient transaction monitoring and improper response to abnormal transactions, indicating that the two companies have deficiencies in the Prevention of Money Laundering (AML) and Combating the Financing of Terrorism (CFT).

MaiCoin and Token Exchange violated the Money Laundering Prevention Act and were fined NT$1.5 million by the Financial Supervisory Commission

With the rapid development of the virtual currency market, global regulators' requirements for anti-money laundering and combating terrorist financing are becoming increasingly strict, and Taiwan is no exception.

In December 2023, the Financial Supervisory Commission launched a project inspection targeting domestic Virtual Asset Service Providers (VASP) and found that several operators had deficiencies in internal control and regulatory compliance, including failure to implement customer reviews and insufficient transaction monitoring.

MaiCoin violation facts

  1. Failure to conduct customer reviews as required and strengthen customer review measures.

  2. Failure to monitor the suspicious transaction patterns revealed by the Financial Supervisory Commission, ineffective transaction monitoring patterns, and failure to set different transaction monitoring threshold values based on the customer's money laundering risk level.

  3. Failure to accurately record customer transaction situations.

  4. For customers with abnormal transactions, their registration qualifications were directly canceled without investigating their transactions and assessing whether to report suspicious transaction reports, and failing to report suspicious transaction reports to the Ministry of Justice Investigation Bureau within the stipulated time.

The Financial Supervisory Commission imposed a fine of NT$1.5 million on Modern Wealth in accordance with Articles 5, 7, 8, and 10 of the Anti-Money Laundering Act.

Bitoex violation facts

  1. Failure to adequately understand the purpose and nature of the business relationship established with customers and the company, failure to adequately understand the source of wealth for high-risk customers, and failure to adequately identify the actual beneficiaries of corporate customers.

  2. Failure to conduct continuous monitoring of transactions in detail to verify whether customer transactions are consistent with the customer and their business and risk, and to understand their source of funds when necessary.

  3. Failure to properly record customer transaction data regarding record retention.

  4. For suspected money laundering or terrorist financing transactions, there were suspicious transaction patterns defined by the company, but no alerts were triggered and no investigations were conducted.

The Financial Supervisory Commission imposed a fine of NT$1.5 million on Bitoex Company in accordance with Articles 5, 7, 8, and 10 of the Anti-Money Laundering Act.

As of now, the Financial Supervisory Commission has issued fines to four VASP operators in Taiwan, accumulating fines exceeding NT$5.5 million, demonstrating the high importance of financial regulation on anti-money laundering.

  • Ace Digital NT$1.52 million

  • Modern Wealth NT$1.5 million

  • Bitoex NT$1.5 million

  • Bitoex NT$1.02 million

These operators failed to establish sufficient internal control measures in the past under unclear international and local regulations, leading to current inspection results that do not meet standards.

With Taiwan set to implement the VASP registration system on December 1, 2024, operators will need to re-evaluate and meet stricter compliance standards, which poses a significant challenge for operators, while also being an opportunity to enhance industry transparency and stability.

Responses from MaiCoin and Bitoex: strengthen internal control and self-requirements

After the announcement on the Financial Supervisory Commission's official website, MaiCoin and Bitoex respectively issued statements promising to immediately improve internal control mechanisms.

MaiCoin stated that it will conduct self-requirements to a higher standard and implement user asset protection principles; Bitoex has established a project team to strengthen internal auditing and training, enhancing compliance awareness among all employees.

In addition, Bitoex also stated that it will share compliance experiences and work with other operators to create a safer and more transparent investment environment.

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