Taiwan’s New Anti-Money Laundering Regulations for Cryptocurrency Firms

Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), has drafted new anti-money laundering (AML) regulations following amendments made to the laws in July. These regulations require cryptocurrency firms to register by the end of September next year, with non-compliance potentially leading to penalties, including imprisonment for up to two years.

Key Points

• The FSC stated that the draft regulations explicitly target Virtual Asset Service Providers (VASPs), requiring them to complete AML registration.
• Currently, VASPs must comply with AML laws based on FSC’s rules introduced in July 2021, which the new regulations will replace.
• According to the FSC, all providers must adhere to the new VASP registration regulations, regardless of their prior compliance declarations.

Implementation Timeline

The new regulations will take effect on January 1, 2025. VASPs are expected to complete AML registration by the end of September, or face imprisonment for up to two years and fines up to NT$5 million ($155,900).

Industry Impact

Kevin Cheng, a crypto lawyer and secretary general of the Taiwan Fintech Association, noted that non-compliant operators will be criminally liable while compliant operators will have stricter regulatory obligations. He stated, “The entire industry environment will gradually move towards the model of licensed financial institutions.”

The regulations will include new requirements such as qualifications for management teams and corporate responsibilities concerning transaction security, consumer asset protection, and information security.

Cheng remarked that these rules impose higher barriers to entry and ongoing operation for industry participants, offering stronger legal protection for Taiwan’s crypto industry and attracting large investors accustomed to traditional finance.

Future Developments

In addition to the new regulations, the FSC is considering a specific law proposal for crypto assets, which is expected to be submitted to the Executive Yuan in June next year. Local media indicates that the FSC aims to complete the draft proposal by the end of this year.

Earlier in June, the local crypto sector formed an industry association to establish self-supervisory rules under governmental guidelines.