Taiwan Accelerates Crypto Framework: AML Regulations To Be Enforced Nov. 30

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As a seasoned researcher with extensive experience in digital finance and regulatory compliance, I find Taiwan’s proactive approach to strengthening its Anti-Money Laundering (AML) framework for crypto businesses commendable. The accelerated implementation of these regulations signifies a significant step forward in ensuring the security and transparency of the cryptocurrency market within the country.

Taiwan has hastened the implementation of its Anti-Money Laundering (AML) regulatory system for crypto companies, with the new rules set to take effect a few days earlier than expected. These regulations now necessitate that Virtual Asset Service Providers (VASPs) abide by the registration requirement, thus avoiding harsher sanctions.

Taiwan Fast-Tracks New AML Mandate

The Financial Supervisory Commission (FSC) in Taiwan has decided to speed up the enactment of its Anti-Money Laundering (AML) registration law for cryptocurrencies, moving the implementation date from January 1, 2025, to November 30, 2024.

Starting from October, a significant revamp of Anti-Money Laundering (AML) regulations has been planned. This revision will impose stricter AML policies on Virtual Asset Service Providers (VASPs), and it’s mandatory for all cryptocurrency companies to register with the Taiwanese government for AML compliance by September 2025.

Businesses operating without proper registration in this nation won’t be allowed to provide services, and they may face penalties such as imprisonment for two years or fines reaching 5 million New Taiwan Dollars (approximately $155,000).

According to the latest rules, the addition and removal of digital assets will undergo strict scrutiny, and cryptocurrency businesses should implement safeguards against unlawful transactions and report any potential red flags in trading volumes or price fluctuations.

In addition, Financial Services Commission (FSC) asks registered cryptocurrency service providers to compile an annual risk assessment report and list their clients’ assets. Furthermore, digital asset custodians are instructed by the regulator to safeguard customer assets in a trust or keep them separate from the platform’s own assets.

To register, firms must submit a form that outlines their business nature. Any changes to the information provided in this form should be updated within five business days with the Securities Over-the-counter (OTC) Trading Center.

Under the new regulatory setup, Taiwan’s existing VASP system will be phased out. Previously compliant companies are required to adapt to this new system and go through the necessary registration procedure.

Following the official announcement, I found myself on the receiving end of fines from the Financial Supervisory Commission, as both MaiCoin and BitoPro, local exchanges under my purview, were found to have breached Anti-Money Laundering (AML) guidelines. These breaches included inadequate customer due diligence, insufficient transaction monitoring, poor record-keeping practices, and failure to report suspicious transactions as required.

More Crypto-Related Laws To Come

This year, Taiwan is making efforts to modernize its legal structure to accommodate cryptocurrency regulations, reflecting a careful yet welcoming stance. Notably, the nation’s Ministry of Finance has declared plans to develop a system targeting crypto tax evasion.

According to Bitcoinist, Finance Minister Chuang Tsui-yun and the head of the Taxation Administration, Sung Hsiu-ling, have promised to assess the existing rules on a cryptocurrency-related tax within the next three months in order to facilitate more effective taxation of crypto gains by the government.

Despite having policies in place for collecting business and corporate income taxes from the 26 registered cryptocurrency exchanges, it was acknowledged by the finance minister that we have not successfully established a system to efficiently gather digital asset-related taxes from individual taxpayers.

It was pointed out by legal specialists that financial overseers could encounter difficulties tackling this matter due to the existing tax laws, since investors can conceal their transactions as foreign activities carried out in U.S. dollars. Consequently, Taiwan’s regulatory bodies need to update these rules to combat crypto tax evasion.

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2024-11-30 15:11