Taiwan’s Financial Supervisory Commission to Implement New Regulation: Unregistered Exchanges to Face Criminal Liability, Beyond Monetary Penalties
The Taiwan government has reached an agreement with relevant departments to strengthen the management of virtual asset trading in response to the increasing issues. This includes amending the Anti-Money Laundering Act and introducing new regulatory measures. These measures include implementing a registration system, establishing stricter capital and cybersecurity requirements, and imposing criminal liability on unregistered businesses.
Enhancing regulation begins with changing the registration system. Different countries have implemented various capital thresholds. For example, Japan and Hong Kong have thresholds of 10 million Japanese yen and 5 million Hong Kong dollars, respectively. The European Union sets different thresholds based on the type of business, ranging from 50,000 to 150,000 euros.
Professor Yang Yueping from National Taiwan University Law School has proposed the establishment of specialized laws for long-term strategies. In the short term, the existing Anti-Money Laundering Act can be modified to address the realities of political and legislative costs. He suggests clearly defining the licensing system for Virtual Asset Service Providers (VASPs) within the existing anti-money laundering framework, including specific conditions for obtaining licenses and compliance requirements. Violations of the regulations would result in license revocation. In addition, self-regulatory norms can enhance rigorous enforcement.
According to the Financial Action Task Force (FATF) regulations, VASPs must register or apply for licenses and comply with relevant anti-money laundering regulations. Different countries have adopted different approaches. For example, the UK and Hong Kong use anti-money laundering licenses, while Singapore and Japan issue licenses for specialized payment institutions. After amending the law, South Korea transitioned from anti-money laundering licenses to issuing a new type of financial license similar to the European Union.
To effectively combat fraud and money laundering activities, the government plans to introduce “alert accounts” regulations similar to the banking system. Under these regulations, businesses can freeze abnormal accounts involved in fraud, thereby reducing victims’ losses. In addition, last year’s amendment added provisions for “dummy accounts” to further prevent these accounts from being used for illegal purposes.
As of March 1st, the new provisions for dummy accounts officially took effect. These provisions mainly target financial institutions and virtual asset accounts, aiming to restrict the daily use of these accounts, such as daily transfer and withdrawal limits, and the ability to close accounts if necessary. These measures help reduce illicit activities and enhance overall financial security.
As the government continues to implement these regulatory measures, the industry and the public have higher expectations for the safety and transparency of virtual asset trading. This not only demonstrates Taiwan’s progress in the fintech field but also emphasizes the necessity for high-standard regulation in the modern economy.
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