Taiwan FSC drafts new AML rules for crypto firms with penalties for non-compliance

Taiwan’s Financial Supervisory Commission has drafted new anti-money laundering regulations for virtual asset service providers that will soon require compliance or result in penalties.

According to a recent announcement, the FSC has submitted draft ‘VASP Registration Regulations’ which will come into force on 1 January 2025.

These measures follow amendments to the AML Law in July 2024 as part of Taiwan’s broader efforts to regulate its growing crypto sector.

Unlike previous AML regulations, these new rules explicitly target cryptocurrency-related businesses and require virtual asset service providers such as crypto exchanges, trading platforms and custodians to register and comply with stricter anti-money laundering protocols.

As part of the new rules, VASPs must submit annual risk assessment reports and establish internal control and audit systems.

Penalty for non-compliance

VASPs that have already completed declarations of compliance under Taiwan’s existing AML laws are required to register with the new system within three months from the date of entry into force of the law. Other firms, including new entrants, must complete their registration by September 30, 2025 to avoid penalties.

According to local media reports, 26 businesses have already completed compliance declarations. If these organizations fail to register in time, this could lead to imprisonment of up to two years and a maximum fine of NT$5 million (approximately $156,140). Previously, penalties for non-compliance were limited to fines only.

The FSC also stated that a comprehensive “special law” for virtual assets is also being worked on. This draft law is expected to be completed by the end of December 2024 and submitted to the Executive Yuan by June 2025.

The special law will also impose other regulations such as capital requirements, personnel qualifications and other standards.

The development follows FSC Chairman Huang Tianzhu’s earlier warning about the rise in illegal activities in the crypto space and his call for tougher penalties on non-compliant exchanges, adding that cryptocurrencies do not have any direct link to the real economy.

Taiwan is also steadily aligning with global markets embracing digital asset investments. On September 30, the FSC allowed professional investors, including institutional investors and high-net-worth institutions, to access funds traded on foreign crypto exchanges through local intermediaries.

In June, regulators allowed BitoGroup, the parent company of Taiwanese crypto exchange BitoPro, to offer crypto-friendly bank accounts in partnership with Far Eastern International Bank, allowing investors to benefit from banking services when transferring funds to the exchange.