As a seasoned analyst with extensive experience in financial regulations and cryptocurrencies, I find Taiwan’s approach to be both prudent and progressive. Having witnessed numerous cases of money laundering and fraud in the crypto space, it is crucial for governments worldwide to enforce stringent anti-money laundering measures.
Starting from November 30, the Taiwanese Financial Supervisory Commission (FSC) plans to implement stricter anti-money laundering (AML) rules for companies offering cryptocurrency services.
In simple terms, it means that crypto platforms and businesses dealing with virtual assets will soon be obligated to sign up for anti-money laundering (AML) compliance regulations.
AML Framework
The Financial Services Commission (FSC) has moved up the due date for compulsory Anti-Money Laundering (AML) registration for cryptocurrency businesses from January 1, 2025, to December 31, 2024.
According to a statement made on November 28th, any foreign entities wishing to offer virtual asset services within Taiwan must first set up a local office and go through the anti-money laundering (AML) registration process as outlined in the Company Law. At present, there are 26 cryptocurrency providers authorized to operate in the country, however, all of these – whether registered or not – are required to adhere to the updated AML regulations.
In an effort to ensure adherence, the Financial Services Commission provided a guide containing key points for detecting unusual activity. They were advised to scrutinize various aspects of customers, including names, banking data, geographical location from IP addresses, and habits in using their accounts.
Beyond this, it’s essential to monitor irregular transactions as well, such as repeated modifications of account details, moving funds frequently, and utilizing several accounts originating from the same Internet Protocol (IP) address.
Failing to comply may lead to significant consequences, such as facing fines that can reach NT$5 million (equivalent to $153,700 USD) and potential imprisonment for a duration of up to two years.
As an analyst, I’m reporting that this regulatory action stems from the Financial Supervisory Commission’s (FSC) decision to impose penalties on two local cryptocurrency exchanges, MaiCoin and BitoPro, due to multiple non-compliance issues, particularly in the area of Anti-Money Laundering (AML) regulations. On Monday, each exchange was fined NT$1.5 million for their lack of compliance with these crucial regulations.
As a researcher examining the findings, I’ve discovered that the cryptocurrency companies under review have fallen short in several key areas. Specifically, they have not significantly enhanced customer due diligence processes, often lacking a comprehensive understanding of their customers’ financial origins. Moreover, these firms have been found to maintain insufficient transaction records and, consequently, have struggled to identify unusual patterns of transactions effectively.
A Balanced Approach
Over the past while, Taiwan has been making significant strides in establishing cryptocurrency regulations with the goal of becoming a prominent figure on the global stage in the digital asset industry. Last September, the Financial Supervisory Commission unveiled ten guiding principles for Virtual Asset Service Providers (VASPs) to develop their own self-regulatory systems.
Based on news sources from the region, these guidelines aim to boost transparency by enhancing information sharing, set definite rules for adding and removing digital assets from lists, and properly manage the storage of both client and corporate finances.
Lately, they announced intentions to establish a registration process, making it mandatory for cryptocurrency exchanges to register with the Taiwanese authorities by September 2025.
As the government increases its supervision, it’s also taking steps to foster expansion within the industry. Recently, the financial regulatory body allowed experienced investors to invest in exchange-traded funds (ETFs) that are connected to international digital assets.
Further, the regulatory body is planning to launch an experimental program for secure storage of institutional cryptocurrencies, with application submissions expected to begin by early 2025. Notably, three major banks have shown initial enthusiasm about joining this venture.
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2024-11-30 12:00