However, the FSC has been motivated to expedite the implementation of the AML regulations, which were originally scheduled to be implemented next year, in response to recent breaches.
Starting November 30, the Financial Supervisory Commission (FSC) of Taiwan will implement new anti-money laundering (AML) regulations for cryptocurrency service providers.
These regulations necessitate that crypto exchanges and virtual asset service providers (VASPs) register for anti-money laundering (AML) conformance.
Initially, the deadline for mandatory AML registration was January 1, 2025; however, the FSC has accelerated the deadline by one month.
The FSC underscored in a statement on November 28 that foreign companies that provide virtual asset services in Taiwan must establish a local presence and complete the AML registration procedure in accordance with the Company Law.
Currently, 26 crypto providers are authorized to operate in Taiwan; however, all providers, regardless of their registration status, are required to comply with the revised AML guidelines.
In order to facilitate conformance, the FSC issued a protocol to assist platforms in identifying dubious activities. Providers are required to monitor client information, such as names, bank account information, IP locations, and account usage patterns.
Furthermore, they are required to monitor for any unusual transaction behaviors, including the frequent modification of account information, the dividing of funds, or the existence of multiple accounts that originate from the same IP address.
Penalties for noncompliance are stringent, with fines exceeding NT$5 million ($153,700) and imprisonment for a maximum of two years.
The recent penalties imposed on two local crypto exchanges, MaiCoin and BitoPro, for violating AML rules have prompted this enforcement.
The two exchanges were each fined NT$1.5 million on November 27 for not doing enough to improve customer due diligence, not knowing enough about their customers’ sources of wealth, not keeping good enough records of transactions, and not being able to spot shady transactions.
Taiwan is making strides in its cryptocurrency regulations to establish itself as a leader in the digital asset sector.
The FSC implemented ten guiding principles for VASPs in September 2022 with the objective of enhancing transparency by establishing explicit listing and delisting standards, ensuring the proper segregation and custody of client and company funds, and enhancing information disclosure.
The FSC has recently announced a registration system that mandates that crypto exchanges register with the Taiwanese government by September 2025.
The government is simultaneously encouraging the expansion of the crypto sector and tightening supervision. Last month, the FSC permitted professional investors to utilize exchange-traded funds (ETFs) that were associated with foreign digital assets.
Furthermore, the regulator is in the process of developing a pilot program for institutional cryptocurrency custody, which will be available for applications in early 2025. Three private institutions have already expressed interest in participating in this initiative.
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