Taiwan brings tough penalties for crypto non-compliance

Taiwan is cracking down hard on cryptocurrency service providers who sidestep regulations. The latest legislative sweep introduces severe penalties, signaling a zero-tolerance policy against non-compliance in the crypto sector. With stringent new rules in place, Taiwan aims to fortify its financial sector against money laundering and fraud.

Registration or Retribution

At the forefront of Taiwan’s regulatory overhaul is the requirement for all virtual asset service providers to complete money laundering prevention registration. Failure to comply could lead a company’s executives to face up to two years in prison.

This mandate is part of a broader legislative initiative, the “New Four Laws to Combat Fraud,” which encompasses the Fraud Crime Harm Prevention Regulations, the Money Laundering Prevention Law, the Technology Investigation and Security Law, and the Communications Security and Supervision Law. Together, these laws enhance the government’s toolkit to tackle and prevent a spectrum of criminal activities, sharpening the focus on crypto transactions.

The revisions specifically target loopholes previously exploited in the crypto market. A major update is the categorization of new, special money laundering crimes. For instance, using virtual asset accounts and third-party payment accounts as conduits for laundering activities now carries a potential prison sentence ranging from six months to five years. Additionally, offenders could be slapped with fines up to NT$50 million.

A Tighter Leash on Currency Dealers

Another critical aspect of the regulatory update is the tightened scrutiny over both domestic and foreign currency dealers. Under the revised Money Laundering Prevention Law, it’s not just the local currency dealers who are required to register for anti-money laundering (AML) purposes. Foreign currency dealers eager to operate within Taiwan must now establish branches or complete proper company registration locally. This step is seen as a move to ensure greater transparency and legal compliance in the virtual asset transactions conducted within and across Taiwan’s borders.

Qiu Shuzhen, the deputy chairman of the Financial Supervisory Commission, highlights the Commission’s role as a stringent overseer in this evolving sector. The focus is not only on the rigorous inspection of currency dealers’ investment and payment flows but also on fortifying their internal management and control systems. Integration of accountants into these processes aims to boost transparency and adherence to the law.

To date, 25 virtual currency exchanges have stepped up, aligning with legal standards and completing compliance statements pertinent to money laundering prevention. This indicates a growing industry acknowledgment of the serious repercussions of non-compliance under Taiwan’s tightening legal framework.

Through the implementation of these robust laws, Taiwan’s government shows its determination against financial crime and its commitment to secure the financial market. The expectation is that as these laws are progressively enforced, they will effectively deter money laundering and fraud, thus providing a safer, more stable market environment for legitimate virtual asset operations.