Emily Walker
Taiwan is ramping up its regulatory measures related to Anti-Money Laundering (AML) for cryptocurrency operations. The updated regulations are being enacted earlier than initially planned, compelling Virtual Asset Service Providers (VASPs) to register to avoid more severe penalties.
Taiwan Expedited AML Regulations
The Financial Supervisory Commission (FSC) of Taiwan has revealed that the start date for crypto AML registration will be moved up from January 1, 2025, to November 30, 2024.
This AML reform, which was first mentioned in October, includes tougher guidelines for VASPs, mandating that all cryptocurrency firms complete their registration by September 2025.
Firms failing to register will be prohibited from operating in Taiwan and may face a two-year prison sentence or fines reaching 5 million NTD (around $155,000).
The new rules will closely scrutinize the listing and delisting of digital currencies, requiring crypto firms to take action against illicit trading and report any unusual trading patterns and price fluctuations.
Additionally, the FSC expects registered crypto service providers to deliver an annual risk assessment and provide details about client assets. The regulator has instructed digital asset custodians to hold customer assets in trust or keep them separate from the firm’s own assets.
To register, companies must fill out a form detailing their business operations and update any changes to this information within five business days to the Securities Over-the-counter (OTC) Trading Center.
These new regulations will replace the existing system for VASPs, requiring those that previously complied with earlier AML regulations to adhere to the new framework and complete the registration.
Following the announcement, the FSC imposed fines on two local exchanges, MaiCoin and BitoPro, for not complying with AML standards concerning customer due diligence, transaction oversight, record-keeping, and reporting of suspicious transactions.
Additional Crypto Legislation Expected
This year, Taiwan has been focusing on revising its regulatory framework to introduce laws related to cryptocurrency, taking a cautious yet welcoming stance. The Ministry of Finance has recently committed to developing a framework to combat crypto tax evasion.
According to reports from Bitrabo, Finance Minister Chuang Tsui-yun, along with Taxation Administration Director-general Sung Hsiu-ling, vowed to review existing regulations in the upcoming three months to optimize the government’s ability to tax profits from cryptocurrencies.
The finance minister acknowledged that the current system does not effectively gather taxes related to digital assets from individuals, despite having established tax policies for business and corporate income taxes regarding the 26 crypto exchanges that have registered under AML regulations.
Legal experts pointed out potential hurdles for financial authorities in tackling this problem under current tax laws, noting that investors might evade detection by disguising transactions as foreign activities using U.S. dollars. This necessitates that Taiwan’s regulators revise existing policies to effectively counter crypto tax evasion.