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Taiwan Proposes Stricter AML Regulations for Crypto Providers

May 9, 2024 at 12:45

Taiwan is set to revise its Anti-Money Laundering (AML) laws, introducing stricter measures for cryptocurrency service providers, with significant penalties for noncompliance.

The Ministry of Justice in Taiwan has drafted amendments that would introduce up to two years of imprisonment and fines reaching $1.5 million for noncompliant firms. These proposed changes are now awaiting review by Taiwan’s national parliament, the Legislative Yuan.

Initiated by Taiwan’s Executive Yuan, the “New Four Laws to Combat Fraud” seek to enhance the enforcement of fraud prevention and impose stringent regulations on anti-money laundering activities within the crypto industry.

The amendments are detailed in four main areas: fraud crime harm prevention regulations, the money laundering prevention law, the technology investigation and security law, and the communications security and supervision law.

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The highlight of these amendments is the revised money laundering prevention law, which specifically targets virtual asset service providers (VASPs). The law includes tougher penalties for VASPs that fail to comply with new regulations.

The legislation introduces three key changes, which involve updated registration processes and restrictions for both domestic and international currency transactions.

VASPs will now face potential imprisonment for operating without proper registration with the relevant authorities.

Additionally, a new legal classification has been created for money laundering offenses that involve third-party payment and virtual asset accounts, with penalties that could include six months to five years in jail and fines up to 50 million New Taiwan dollars (approximately $1.5 million).

According to Taiwan’s Deputy Minister of Justice, Huang Mou-hsin, the existing laws only allow for administrative penalties against noncompliant cryptocurrency firms. The proposed amendments, however, will criminalize such violations, imposing substantial fines and jail time.

Furthermore, the amendments would require foreign cryptocurrency platforms to establish local entities and register for AML to avoid criminal penalties.

This legislative move follows a recent announcement by the country’s securities regulator, which outlined plans to propose new digital asset laws by September.

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