Taiwan's New AML Regulations for Crypto Firms: What You Need to Know

Taiwan Unveils New Anti-Money Laundering Regulations for Virtual Asset Service Providers

The Financial Supervisory Commission (FSC) of Taiwan has announced significant updates to its Anti-Money Laundering (AML) regulations that will impact all local virtual asset service providers (VASPs). These new rules are set to come into effect by 2025, establishing a more regulated environment for cryptocurrency operations in Taiwan.

Overview of the New Regulations

As reported by Cointelegraph on October 2, 2023, the FSC's new AML measures follow previously proposed amendments aimed at tightening the regulation of crypto firms. The updated regulations require all VASPs to register with the government by September 2025. Non-compliance will result in severe penalties, including potential fines up to 5 million New Taiwan dollars (approximately $155,900) or even a two-year prison sentence.

Implementation Timelines

All VASPs must comply with the new regulations starting January 1, 2025. Even if a firm has completed the previous AML compliance measures, they will still need to adhere to the new standards and undergo the registration process. The FSC has advised VASPs to consider waiting until the new registration system is in place before filing any documents to prevent the need for reapplying under updated rules.

Annual Risk Assessment Reports

Under the new compliance measures, VASPs will be required to conduct an annual risk assessment and submit a report to the relevant government agency. This step aims to enhance the transparency and accountability of virtual asset providers in the country.

Future Legislative Proposals

In addition to the current AML regulations, the FSC is expected to introduce a new proposal for broader crypto-related laws by June 2025, with a draft anticipated by the end of this year. This move reflects Taiwan's commitment to adapting to the evolving cryptocurrency landscape.

Expanding the Crypto Sector: Digital Asset ETFs

On September 30, the Taiwanese government further demonstrated its growing involvement in the crypto sector by opening the digital asset ETF market to local professional investors. This new opportunity allows access to foreign digital asset exchange-traded funds (ETFs) characterized as high-risk. The initiative aims to bolster Taiwan’s financial market competitiveness and aligns with initiatives seen in financial hubs like Hong Kong and Singapore.

Conclusion

The introduction of these new AML regulations represents a significant shift in Taiwan's approach to cryptocurrency regulation. As VASPs prepare for compliance, the financial landscape in Taiwan continues to evolve, with the government showing a strong interest in enhancing its digital asset market.