Taiwan’s FSC Unveils New AML Regulations for Virtual Asset Providers

Taiwan’s Financial Supervisory Commission (FSC) unveiled updated Anti-Money Laundering (AML) regulations on October 2nd. The main objective is to boost the oversight of local virtual asset service providers (VASPs).

Non-compliant entities, on the other hand, will be heavily penalized. The revised regulations will supersede the existing AML framework.

Updated AML Regulations Aim to Strengthen Crypto Oversight

According to the official press release, these new measures, Effective January 1, 2025, require all crypto firms to register with the Taiwanese government by September 2025.

Strict penalties will be imposed for non-compliance, including up to two years in prison or fines of 5 million New Taiwan dollars (approximately $155,900).

Taiwan implemented its earlier set of regulations on cryptocurrency anti-money laundering in July 2021. However, with the recent announcement, even companies that are already fully compliant will need to re-register with the FSC to avoid penalties.

The regulator has been preparing for these changes since March, emphasizing the need for VASPs to submit an annual risk assessment report to the relevant authorities.

Additionally, the Commission has advised VASPs to postpone document submissions until the new registration system is in place to avoid the complications of reapplying under updated regulations.

As part of Taiwan’s comprehensive strategy to improve its regulatory framework for digital assets, the FSC plans to propose new crypto-related laws by June 2025, with a draft expected by the end of 2024, ensuring that the local crypto landscape remains secure and compliant.

FSC Greenlights ETFs for Professional Investors

Despite the new AML laws, Taiwan also appears to be easing its regulations on cryptocurrency in certain areas while simultaneously maintaining a cautious stance on market risks. Last month, the FSC officially allowed professional investors to engage with exchange-traded funds (ETFs) associated with “foreign virtual assets.”

The FSC recognized the high investment risks associated with foreign virtual asset ETFs and recommended that only professional investors, such as institutional ones, high-net-worth clients, and qualified individuals, be permitted to get involved.

Key provisions include the setting up of a suitability assessment system for these products, mandatory risk warning letters for non-institutional clients before their initial purchases, and the provision of detailed product information. Additionally, securities firms are required to conduct regular education and training for their staff on virtual assets to ensure thorough understanding.