Taiwan’s FSC prepares crypto AML guidelines forcing enterprises to register or risk prison time

AML compliance registration will be mandatory for virtual asset service providers in Taiwan, or they will be subject to criminal penalties, according to the Financial Supervisory Commission.

The Financial Supervisory Commission, Taiwan’s financial regulator, has developed new anti-money laundering regulations in response to the amendments to the laws that were implemented in July. By the conclusion of September of the following year, these regulations necessitate that cryptocurrency firms register. Penalties, such as imprisonment for a maximum of two years, may result from noncompliance.

The FSC announced on Wednesday that it has developed appropriate rules that specifically target virtual asset service providers (VASP) and necessitate their completion of anti-money laundering (AML) registration.

Currently, Taiwan mandates that VASPs adhere to AML laws in accordance with the FSC’s regulations, which were implemented in July 2021. The new regulations will be implemented in the near future. “All providers must comply with the new VASP registration regulations and complete the registration process,” the FSC stated in its statement on Monday, regardless of whether a provider has completed the existing compliance declaration.

VASPs are anticipated to finalize their AML registration by the conclusion of September, following the implementation of the new regulations on January 1, 2025. Alternatively, they may be subject to imprisonment for a maximum of two years and a fine of up to NT$5 million ($155,900), as per local media reports that cite the FSC.

In an interview with The Block, Kevin Cheng, the secretary general of the Taiwan Fintech Association and a crypto litigator, stated that the new regulations will result in monetary penalties for non-compliant operators and more stringent regulatory obligations for compliant operators. Cheng stated that the complete industry environment will progressively transition to the paradigm of licensed financial institutions.

New rules combine business duties such transaction security, consumer asset protection, and information security, as well as the classic AML duties, according to Cheng. The new rules also demand credentials for the management team.

In the interim, the FSC is considering a specific law proposal for crypto assets that it intends to present to the Executive Yuan, Taiwan’s highest administrative body, in June of the following year. By the conclusion of this year, the FSC intends to finalize the proposed proposal, according to local media.

In June, the local crypto sector established an industry association to develop self-supervisory regulations in accordance with the government’s guidelines.

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