Taiwan’s Ministry of Justice has proposed amendments to enhance anti-money laundering (AML) measures within the crypto industry.
If enacted, the new proposals will mark a substantial shift from the current regime, in which digital currency firms’ non-compliance is met with administrative penalties, to a stricter legal framework that includes criminal penalties for serious breaches.
From Crypto Administrative Penalties To Criminal Charges
These changes are part of Taiwan’s ongoing efforts to align its regulatory environment with global standards, particularly as digital assets play an increasingly prominent role in the financial sector.
The proposed legal framework would require domestic and international cryptocurrency firms operating in Taiwan to register and demonstrate compliance with AML regulations. Failure to meet these requirements could lead to severe consequences, including imprisonment.
Under the current system, Taiwanese authorities have limited powers, mainly restricted to imposing fines on firms that fail to adhere to AML protocols, according to Deputy Minister of Justice Huang Mou-hsin. However, the newly proposed amendments by the Ministry of Justice aim to escalate the severity of penalties.
Huang Mou-hsin highlighted that these changes would criminalize violations of AML regulations by crypto businesses, shifting the landscape from administrative oversight to legal enforcement.
The draft amendments stipulate non-compliant firms could face up to “two years” in jail. Moreover, overseas crypto platforms seeking to serve Taiwanese customers must establish a local presence and undergo the AML registration process.
Expanding The Scope Of AML Laws
The proposed amendments target crypto firms’ compliance and aim to integrate specific provisions for digital assets into Taiwan’s existing AML legislation.
Under these proposals, individuals using cryptocurrencies for money laundering could face prison terms of six months to five years. They may also be subject to fines of up to NT$50 million (approximately $1.5 million).
This inclusion of cryptocurrencies explicitly in the AML laws signifies a comprehensive approach to tackling financial crimes in the digital age.
The proposed changes are now set to be reviewed by the Legislative Yuan, Taiwan’s national parliament. This step is crucial for the amendments to become law and reflects the government’s commitment to creating a “robust” regulatory framework for the burgeoning crypto industry.
Notably, Taiwan has consistently regulated its crypto market, introducing several guidelines and rules in recent years.
The Financial Supervisory Commission (FSC) introduced anti-money laundering rules for digital currency service providers in July 2021. However, beyond these AML requirements, the broader digital currency sector has remained relatively unregulated.
The FSC’s recent “Guiding Principles for the Management of Virtual Asset Platforms and Transaction Businesses” further underlines this cautious regulatory expansion.
These principles set standards for customer protection, including transaction transparency, asset custody, and internal control management.
They also define the operational constraints for offshore digital currency platforms, which prohibit businesses from conducting business in Taiwan without proper registration and declaration of AML compliance.
Featured image from Unsplash, Chart from TradingView
