Taiwan’s Financial Supervisory Commission (FSC) is taking a significant step in regulating the cryptocurrency space. Starting from November 30, new anti – money laundering (AML) rules will be in full force for cryptocurrency service providers. This move comes on the heels of recent violations by local exchanges, signaling the FSC’s determination to enhance oversight in the industry.
The original deadline for these AML regulations was set for early next year. However, due to violations detected in the market, the FSC has expedited their implementation. These new rules mandate that all cryptocurrency exchanges and other virtual asset service providers (VASPs) must register for AML compliance.
The initial cutoff for mandatory AML registration for cryptocurrency firms was January 1, 2025. But the FSC decided to push this back by a month to November 30. On November 28, the FSC made it clear that overseas entities offering virtual asset services in Taiwan have to set up local branches. They must also complete the AML registration process in accordance with the country’s Company Law. Currently, 26 cryptocurrency providers have the approval to operate in Taiwan. Whether they are already registered or not, every single one of them has to abide by these latest AML requirements.
To assist with compliance, the FSC has provided a detailed checklist for platforms. This helps them identify any suspicious activities. Platforms are now required to closely monitor customer details. This includes names, bank account information, IP locations, and how customers use their accounts. They also need to be on the lookout for any out – of – the – ordinary transaction activities. This could mean things like customers frequently changing their account information, splitting their funds in unusual ways, or multiple accounts using the same IP address.
Non – compliance with these new rules will not be taken lightly. Offenders could face severe penalties. This includes a maximum fine of NT$5 million (about $153,700) and imprisonment for up to two years.
This regulatory action follows the FSC’s decision to penalize two local exchanges, MaiCoin and BitoPro, for repeated violations. On Monday, these exchanges were each slapped with a NT$1.5 million fine for not complying with AML regulations. According to the FSC, these cryptocurrency companies had not improved their customer due diligence processes. They did not have a good enough understanding of where their customers’ wealth came from. They also failed to keep proper transaction records and were not efficient at spotting suspicious transaction patterns.
Taiwan has been actively working on regulating the cryptocurrency industry. This is part of its strategy to position itself as a global leader in the digital asset field. Last September, the FSC introduced ten guiding principles for VASPs. The aim was to create a self – regulatory framework. According to local media reports, these principles were focused on increasing transparency through better information disclosure. They also set clear standards for listing and delisting virtual assets and made sure that customer and company funds were properly separated and safeguarded.
Recently, the FSC also revealed plans to introduce a registration system. While the government is strengthening regulations, it is also taking steps to encourage the growth of the industry. Last month, financial regulators gave professional investors access to exchange – traded funds (ETFs) linked to foreign digital assets. Additionally, the regulators are preparing an institutional cryptocurrency custody pilot project. Applications for this project will open in early 2025, and three private banks have already shown interest in participating.
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