Bitrabo Editorial
The Ministry of Justice in Taiwan has put forward new proposals aimed at improving anti-money laundering (AML) measures in the cryptocurrency industry.
If approved, the proposed amendments would shift the current practice of imposing administrative penalties on digital currency firms for non-compliance to a more stringent legal framework that includes criminal consequences for serious violations.
Transition to Criminal Charges for Crypto Firms
These changes are part of Taiwan’s efforts to bring its regulatory framework in line with global standards, especially with the increasing importance of digital assets in the financial sector.
The proposed legal framework would mandate that domestic and international cryptocurrency companies operating in Taiwan register and show compliance with AML regulations. Failure to meet these requirements could result in imprisonment.
Previously, Taiwanese authorities could only issue fines to firms not following AML protocols, as stated by Deputy Minister of Justice Huang Mou-hsin. However, the Ministry of Justice’s proposed amendments aim to increase the severity of penalties.
Huang Mou-hsin emphasized that these changes would make violations of AML regulations by crypto businesses a criminal offense, moving from administrative oversight to legal enforcement.
The draft amendments suggest that non-compliant firms could potentially face up to two years of imprisonment. Additionally, foreign crypto platforms looking to cater to Taiwanese clients must establish a local presence and undergo AML registration.
Enhancing AML Laws Scope
The proposed amendments focus on ensuring compliance among crypto firms and seek to incorporate specific regulations for digital assets into Taiwan’s existing AML legislation.
According to these proposals, individuals involved in money laundering with cryptocurrencies could receive prison sentences ranging from six months to five years and face fines of up to NT$50 million (around $1.5 million).
Including cryptocurrencies explicitly in AML laws demonstrates a comprehensive approach to combating financial crimes in the digital era.
The Legislative Yuan, Taiwan’s national parliament, will now review the proposed changes. This stage is pivotal for the amendments to be enacted into law and demonstrates the government’s dedication to establishing a robust regulatory framework for the growing crypto industry.
Taiwan has consistently maintained regulatory oversight of its crypto market, introducing several guidelines and regulations in recent years.
The Financial Supervisory Commission (FSC) introduced AML rules for digital currency service providers in July 2021. While these AML requirements are in place, the broader digital currency sector remains relatively unregulated.
The FSC’s recent “Guiding Principles for the Management of Virtual Asset Platforms and Transaction Businesses” emphasizes this careful regulatory expansion, setting standards for customer protection, transparency in transactions, asset custody, and internal control management.
Moreover, the principles outline operational restrictions for offshore digital currency platforms, preventing them from operating in Taiwan without proper registration and compliance declaration for AML regulations.
Featured image from Unsplash, Chart from TradingView