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, which will soon require compliance or lead to penalties.

According to a recent announcement, the FSC has introduced a draft of the ‘VASP Registration Regulations,’ which will take effect on Jan. 1, 2025. 

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

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

VASPs must submit annual risk assessment reports and set up internal control and audit systems as a part of the new rules.

Penalty for non-compliance 

VASPs that have already completed compliance declarations under Taiwan’s existing AML laws must register under the new system within three months of the law’s effective date. Other firms, including new entrants, must complete their registration by the deadline of Sept. 30, 2025, to avoid penalties.

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

The FSC also mentioned that a comprehensive “special law” for virtual assets is in the works. A draft of this law is expected to be finalized by the end of December 2024 and submitted to the Executive Yuan by June 2025. 

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

The development follows FSC Chairman Huang Tianzhu’s earlier warning about a surge in illicit activities in the crypto space and his call for harsher penalties on non-compliant exchanges, adding that cryptocurrencies lack any direct connection to the real economy.

Taiwan is also steadily aligning itself with global markets that are embracing digital asset investments. On Sept. 30, the FSC allowed professional investors, including institutional investors and high-net-worth entities, to access foreign crypto exchange-traded funds via local brokers.

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