Taiwan’s AML Rules Covering Crypto Firms to Take Effect Tomorrow

Taiwan’s Financial Supervisory Commission (FSC) will implement new anti-money laundering (AML) rules for the cryptocurrency industry on November 30, a month earlier than initially planned, The Block reported first.

New AML Rules

Under the updated regulations, cryptocurrency companies serving Taiwanese clients must register for AML compliance. Failure to register or adhere to the new rules could result in up to two years of imprisonment or fines of up to 5 million New Taiwan dollars (around $154,000).

The Taiwanese regulator had previously announced that these rules would take effect on January 1, 2025. However, the implementation was unexpectedly moved forward by a month, with no explanation for the change.

The new requirements state that all “virtual asset service providers” operating in Taiwan must establish a local company or branch office under the island’s Company Act and complete AML registration before commencing operations.

Even companies already complying with Taiwan’s existing AML rules must meet the updated standards. Earlier, the FSC advised crypto service providers to wait until the new registration system was implemented before submitting documents, avoiding duplication of efforts.

Interestingly, in the UK's financial market regulator rejected over 87 per cent of cryptocurrency registration applications due to AML lapses in its latest review.

Taiwan's updated compliance program also requires companies to prepare and submit an annual risk assessment report to the government. Additionally, the FSC is expected to propose dedicated cryptocurrency legislation by June 2025, with a draft to be submitted by the end of 2024.

Cracking Down on Non-Compliance

Taiwanese authorities recently fined two local cryptocurrency exchanges, MaiCoin and BitoPro, 1.5 million New Taiwan dollars (about $46,200) each for failing to comply with AML rules.

The FSC revealed that the exchanges did not adequately perform customer due diligence and lacked sufficient understanding of the sources of their customers’ funds. They also failed to properly record transaction data and identify suspicious transactions.

Both exchanges acknowledged the lapses and committed to addressing these issues.