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Ruholamin Haqshanas
Author
Ruholamin Haqshanas
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Taiwan is set to implement its new Anti-Money Laundering (AML) regulations for crypto businesses following fines issued to two exchanges for compliance breaches.
The Financial Supervisory Commission (FSC) announced on November 27 that the deadline for mandatory AML registration for virtual asset service providers (VASPs) has been moved up to November 30, 2024, from the previous January 1, 2025, timeline.
The new rules require all crypto service providers, including those already operating, to register under the updated AML measures.
Crypto Non-Compliance in Taiwan Could Lead to $155,000 in Fines
Non-compliance could lead to penalties of up to $155,900 (5 million New Taiwan dollars) or a prison sentence of up to two years.
According to FSC records, while 26 crypto providers are approved to operate, none have yet completed the newly mandated AML registration.
The FSC has issued a detailed checklist to help exchanges identify suspicious activities.
This includes monitoring customers’ names, bank account details, IP locations, and trading patterns.
Exchanges are also advised to track unusual behaviors, such as fund splitting, multiple accounts tied to the same IP, and frequent asset transfers.
The crackdown comes after the FSC fined two local exchanges, MaiCoin and BitoPro, for violations related to customer due diligence (CDD), transaction monitoring, record-keeping, and suspicious activity reporting.
These fines highlight the regulator’s focus on strengthening Taiwan’s AML compliance framework.
To comply with the new rules, crypto service providers must submit a registration form outlining their business operations.
Any changes to the submitted information must be reported to the Securities Over-the-counter (OTC) Trading Center within five business days.
Additionally, crypto businesses are required to establish a robust management system for financial auditing and accounting.
Last month, Taiwan’s FSC announced that it plans to implement a registration system for cryptocurrency exchanges by November 30.
FSC to Launch Institutional Trial for Crypto Custody Services
More recently, the FSC announced plans to launch a trial for crypto custody services through local banks.
The FSC intends to begin accepting applications for the trial in the first quarter of 2025.
Three private banks have already expressed interest in participating in this pilot program.
Taiwan has been pushing for crypto regulations amid efforts to establish itself as a global cryptocurrency hub.
The country is set to impose restrictions on offshore cryptocurrency exchanges operating within its jurisdiction unless they gain the required registration.
In September last year, the country’s FSC drafted ten guiding principles for VASPs to establish self-regulatory rules.
The guiding principles, expected to be officially released by the end of this month, will focus on various aspects.
More specifically, the guidelines are expected to strengthen information disclosure, establish review standards for virtual asset listing and delisting, and ensure the separation and custody of companies’ and customers’ assets.
