Taiwan’s new AML rules mandate VASPs to complete comprehensive compliance registration with severe penalties for non-compliance.
Taiwan has accelerated its regulatory framework, implementing stringent anti-money laundering (AML) rules a month ahead of schedule. Starting November 30, the island’s Financial Supervisory Commission (FSC) will enforce unprecedented measures designed to fortify the digital asset landscape against potential financial misconduct.
The sweeping regulations mandate that virtual asset service providers (VASPs) must complete comprehensive AML compliance registration, signaling a watershed moment for cryptocurrency operations within Taiwan. Failure to comply carries substantial consequences, with potential penalties including imprisonment of up to two years and fines reaching NT$5 million (approximately $153,700).
Overseas virtual asset service providers face a critical directive: establish a formal company or branch office under Taiwan’s Company Act and secure mandatory AML registration before commencing operations. This regulatory approach demonstrates Taiwan’s proactive stance in creating a robust, transparent digital financial environment.
FSC’s New Rules Strengthen Security
Jin-Lung Peng, FSC chair, expressed the urgency behind these accelerated regulations during a parliamentary session in October. Highlighting societal demands for enhanced fraud prevention, Peng emphasized that the VASP registration system represents a comprehensive legal framework aimed at safeguarding financial integrity.
Hsi-Ho Huang, director of the securities firms division at FSC, elaborated on the multifaceted approach during a Taipei conference. The new regulations will intensify scrutiny across critical domains including fiat currency custody, information security, customer complaint management, record-keeping, and transparent information disclosure.
Trading platforms now face stringent requirements to develop clear protocols for crypto asset listing and delisting alongside robust mechanisms to prevent unfair trading practices and detect abnormal price and volume fluctuations.
Local Exchanges Face Fines for AML Violations
Kevin Cheng, a crypto legal expert and secretary general of the Taiwan Fintech Association, highlighted key changes in the regulatory landscape. He emphasized that virtual asset service providers now face expanded obligations.
“The new law imposes stricter regulatory oversight for existing VASPs, […] The new rules require companies to fulfill additional obligations beyond anti-money laundering measures, such as administrative reporting, information security, and consumer protection,” said Cheng.
Recent regulatory actions demonstrate a strong commitment to enforcement. Local crypto exchanges MaiCoin and BitoPro were fined NT$1.5 million each for major AML violations. Issues identified included lapses in customer due diligence, inadequate understanding of wealth sources, poor transaction record-keeping, and limited ability to detect suspicious transaction patterns.
In response, MaiCoin committed to swift corrective measures, focusing on user asset protection and maintaining smooth business operations. BitoPro took proactive steps by forming a dedicated task force and implementing significant improvements, including enhanced internal audits, advanced employee training, and organization-wide compliance awareness initiatives.
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