Taiwan Enhances Crypto Regulations with Accelerated AML Framework
Taiwan’s Swift Move on Crypto Anti-Money Laundering Regulations
In a significant regulatory shift, Taiwan is expediting the rollout of its comprehensive Anti-Money Laundering (AML) framework targeting cryptocurrency businesses. The revamped regulations, now set for early implementation, will take effect from November 30, 2024, moving up from the previously planned date of January 1, 2025. This initiative targets Virtual Asset Service Providers (VASPs), mandating stringent compliance to avoid severe repercussions.
Details of Taiwan’s AML Framework for Crypto Firms
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The Financial Supervisory Commission of Taiwan has outlined a robust set of AML guidelines for cryptocurrency firms. These new regulations obligate all involved companies to finalize their AML registration with the government by September 2025. Non-compliance could result in disqualification from operating in Taiwan and potential penalties, including imprisonment for up to two years or fines reaching 5 million NTD (approximately $155,000).
Under the new framework, the listing and delisting processes of digital assets will face enhanced scrutiny. Crypto companies are expected to implement rigorous checks against illegal trading activities and report any suspicious transactions, particularly those showing unusual volume or price fluctuations. Additionally, registered service providers must conduct annual risk assessments and provide detailed reports on client assets. Custodians of digital assets are required to segregate client funds from the company’s own assets or hold them in trust.
Registration Process and Transition to New System
To comply with the new guidelines, crypto firms must submit a form detailing their business operations. Any updates to this information must be reported within five business days to the Securities Over-the-counter (OTC) Trading Center. Companies that have adhered to previous AML regulations are required to transition to this enhanced system and complete the registration process anew.
Following this announcement, the Financial Supervisory Commission imposed fines on two local exchanges, MaiCoin and BitoPro, for breaches in AML protocols concerning customer due diligence, transaction monitoring, and reporting of suspicious activities.
Upcoming Developments in Taiwan’s Crypto Legislation
This year, Taiwan has been progressively updating its regulatory landscape in relation to cryptocurrency, maintaining a cautious yet supportive approach. The Ministry of Finance is also working on a framework to tackle issues of crypto tax evasion, signaling further regulatory developments. Finance Minister Chuang Tsui-yun, along with Sung Hsiu-ling, Director-General of the Taxation Administration, has committed to reviewing and potentially revising existing regulations over the next three months to enhance tax collection from cryptocurrency transactions.
Despite existing policies aimed at taxing business and corporate income from registered exchanges, legal experts have highlighted potential loopholes in the taxation of individual digital asset gains. These gaps allow investors to potentially evade taxes by classifying transactions as international, conducted in U.S. dollars. Consequently, Taiwan’s regulatory bodies are tasked with revising current tax laws to effectively address these challenges.
