Taiwan is preparing to implement new anti-money laundering (AML) regulations on November 30, bringing forward their entry into force by a month, as part of a nationwide effort to combat fraud. These regulations will impact virtual asset service providers (VASPs), including Cryptocurrency exchanges, establishing stricter measures for operation in the country.
Key regulations
The new rules require VASPs to:
- Register your AML compliance before operating in Taiwan.
- Establish a branch or local company under the Taiwan Company Law.
- Comply with additional obligations, such as information security, consumer protection, and clear procedures for listing or delisting crypto assets.
Failure to comply could lead to severe penalties, including up to two years in prison and fines of up to NT$5 million ($153,700).
Objectives and context
The chairman of the Financial Supervisory Commission (FSC), Jin-Lung Peng, stated that these regulations respond to a growing social demand to prevent fraud. In addition, they strengthen legal tools for authorities to confront difficult-to-trace criminal activities.
Recent cases of non-compliance
Two major local exchanges, MaiCoin and BitoPro, were fined NT$1.5 million each for violations of AML regulations, including:
- Lack of diligence in know your customer (KYC).
- Deficiencies in documenting transactions and tracing sources of wealth.
- Inability to identify suspicious transaction patterns.
Both exchanges have taken corrective measures, implementing stricter internal audits, staff training, and improvements to compliance controls.
Impact on the crypto ecosystem
Kevin Cheng, a cryptocurrency lawyer, highlighted that these regulations impose greater obligations on existing VASPs, ensuring a more secure and transparent ecosystem. However, they also represent a challenge for companies operating in Taiwan, as they will have to quickly adapt to these demands to maintain their operations.
Conclusion
With these measures, Taiwan reinforces its position as a leader in cryptocurrency regulation, protecting users and ensuring a more reliable environment for digital transactions.
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