Tougher AML Measures for Crypto Service Providers: Taiwan’s Proposal

Taiwan is taking steps to strengthen its Anti-Money Laundering (AML) regulations and combat fraud in the virtual asset industry. The Ministry of Justice in Taiwan has proposed amendments to the existing AML laws, which could result in non-compliant firms facing jail terms of up to two years and fines of up to $1.5 million. These proposed amendments will now be reviewed by Taiwan’s national parliament.

Initiated by Taiwan’s Executive Yuan, the proposed law, known as the “New Four Laws to Combat Fraud,” aims to bolster efforts to crack down on fraud and establish stricter regulations for preventing money laundering in the crypto service provider sector. The amended regulations consist of four crucial components: fraud crime harm prevention, money laundering prevention, technology investigation and security, and communications security and supervision.

Of these components, the most significant change comes in the form of the newly revised money laundering prevention law, specifically targeting virtual asset service providers (VASPs). The amended law imposes harsher penalties on VASPs found in violation of the regulations. Changes to this law include revised registration requirements and restrictions for domestic and international currency dealers.

Under the updated laws, virtual asset service providers may face imprisonment of up to two years if they fail to register with the appropriate authority. A new legal category has been established for money laundering offenses related to third-party payment accounts and virtual asset accounts. Those found guilty of using third-party accounts for money laundering can now face prison terms ranging from six months to five years, along with fines of up to 50 million Taiwanese dollars ($1.5 million).

Huang Mou-hsin, Taiwan’s deputy minister of justice, highlighted that the current provisions only allow authorities to impose administrative penalties on non-compliant cryptocurrency companies. The proposed amendments seek to criminalize such behavior by imposing hefty fines and prison sentences.

The proposed law also poses potential risks for foreign cryptocurrency platforms. Unless these platforms establish local entities and obtain AML registration, they may face criminal penalties under the proposed regulations. This move by Taiwan aligns with their ongoing efforts to regulate the digital asset industry, as the country’s securities regulator previously announced plans to propose new laws for digital assets by September this year.

Taiwan is taking proactive measures by amending its AML regulations to combat fraud and strengthen measures for virtual asset service providers. The proposed amendments introduce stricter penalties for non-compliant firms and established revised registration requirements. This new law aims to criminalize non-compliance and also extends its reach to foreign cryptocurrency platforms operating within Taiwan’s jurisdiction.