Amendment to Taiwan Banking Association: Exchange Users Can Withdraw Funds Using Different Banks, Strengthening Supervision on Opening Accounts in Overseas Exchanges
The Banking Association recently passed a key amendment aimed at strengthening the cooperation norms between banks and virtual currency trading platforms, while enhancing the security and convenience of transactions, which is seen as a major step against illegal activities such as money laundering.
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Banking Association Amendment: User accounts become more flexible, responsible for monitoring exchange customers
Open user accounts can be used with the same name but different banks
Strict monitoring of fund flows required for exchanges
New roles and responsibilities for banks in the virtual currency industry
Strict verification of exchange user identity and compliance
Overseas exchange account opening requires anti-money laundering qualifications
In the past, the regulations of the Banking Association required operators and users of virtual currency trading platforms to use accounts from the same bank for transactions in order to facilitate the control of fund flows.
However, this provision has caused a lot of inconvenience in practice. Therefore, the new amendment allows operators and users to use accounts from different banks for transactions, as long as the account name matches the user’s name. This change not only increases transaction convenience but also reduces operational difficulties.
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In order to further prevent illegal activities such as money laundering, the new amendment requires platform operators to strictly monitor the flow of funds. Any funds involved in virtual currency transactions must be transferred from a deposit account with the same name as the user. This requirement effectively avoids transferring funds to other accounts, thus reducing the risk of money laundering.
The amendment also emphasizes the role and responsibility of banks in providing fund custody services. Banks need to ensure that the fund custody services they provide are based on trust or in the form of full performance guarantee. In addition, banks should assess the business scope of platform operators and adopt corresponding internal control mechanisms based on the level of risk.
The new regulations also include identity verification requirements for virtual asset service providers (VASPs) and their transaction businesses. Platform operators must confirm whether they comply with anti-money laundering regulations, especially for overseas customers, they need to verify their registration or approval status in relevant countries to ensure their legitimacy and transparency.
The Banking Association stated that if a customer is an overseas customer, the bank must ascertain whether the country where it is established or operates has anti-money laundering or business supervisory authorities, such as the Financial Crimes Enforcement Network (FinCEN) of the United States or the Financial Services Agency (FSA) of Japan, and whether they have registered, registered, or approved platform operators.
(Notice regarding the promotion of exchanges with MSB qualifications) Many overseas exchanges will report MSB to the United States, but registering as an MSB does not mean that they have been endorsed by FinCEN’s supervision. It is only for the purpose of registering with the government. The MSB license itself or others does not provide protection for overseas investors in the United States. It can only serve as a basis for the company to comply with anti-money laundering and anti-terrorism financing. Whether encrypted product investors can be protected still depends on whether the company is regulated and supervised in the jurisdiction where the users are located. If the business involves derivatives (such as contracts, futures and options), it is also not within the scope of MSB regulation.
Exchanges
Taiwan
Banking Association
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