Taiwan Introduces New AML Regulations for Crypto Firms, Effective January 2025

Taiwan Introduces New AML Regulations for Crypto Firms, Effective January 2025

Taiwan’s Financial Supervisory Commission (FSC) has unveiled a draft of new anti-money laundering (AML) regulations aimed specifically at virtual asset service providers (VASPs). These new rules, set to take effect on January 1, 2025, represent a significant step in Taiwan’s efforts to regulate the burgeoning cryptocurrency sector.

The “VASP Registration Regulations” were introduced following amendments to the AML Act made in July 2024, expanding the scope of compliance requirements for businesses involved in cryptocurrency activities. Unlike previous AML guidelines, these regulations explicitly target crypto-related enterprises, such as exchanges, trading platforms, and custodial services, mandating that they register and adhere to more rigorous AML protocols.

Key compliance requirements for VASPs include submitting annual risk assessment reports, as well as establishing robust internal control and audit systems.

Penalties for Non-Compliance

Entities that have already submitted compliance declarations under Taiwan’s existing AML framework must complete their registration under the new system within three months of the law’s effective date. New entrants and other firms must finalize their registration by September 30, 2025. Failure to comply may result in severe penalties, including up to two years of imprisonment and a maximum fine of NT$5 million (approximately $156,140). Under the previous framework, non-compliance penalties were limited to fines.

The FSC also announced that a broader “special law” for virtual assets is in development. A draft of this legislation is expected by the end of December 2024, with plans to submit it to the Executive Yuan by June 2025. This special law will likely introduce additional regulations, including capital requirements, personnel qualifications, and other industry standards.

This regulatory development comes in response to warnings from FSC Chairman Huang Tianzhu regarding an increase in illicit activities in the cryptocurrency space. He has called for stronger penalties for non-compliant exchanges, reiterating that cryptocurrencies lack direct ties to the real economy.

Taiwan’s regulatory landscape is gradually aligning with global trends, encouraging greater institutional involvement in digital assets. On September 30, 2024, the FSC allowed professional investors (such as institutional entities and high-net-worth individuals) to invest in foreign crypto exchange-traded funds (ETFs) through local brokers.

Additionally, in June 2024, the FSC permitted BitoGroup, the parent company of Taiwanese crypto exchange BitoPro, to launch crypto-friendly bank accounts in collaboration with Far Eastern International Bank, enabling smoother fund transfers for investors.