Taiwan Amends AML/CFT Laws, Includes Regulatory Requirements for Cryptocurrency Operations
Taiwan’s legislature has amended the country’s anti-money laundering and terrorism financing prevention laws to include regulatory requirements for cryptocurrency transactions.
Taiwan’s Anti Money Laundering Regulations for Cryptocurrency
According to Focus Taiwan, the amendments grant the country’s top financial regulator (FSC) the power to clamp down on anonymous cryptocurrency transactions. Beyond regulating digital currency transactions, the Financial Supervisory Commission (FSC) can also monitor crypto exchange operators.
Based on the new provisions, the FSC will mandate all cryptocurrency exchange platforms to operate a “real-name system.” Exchange operators must insist that users register with their real identities. Banks can halt anonymous transactions and report same to the financial regulator.
Speaking on the decision, the Ministry of Justice had this to say:
A compliance culture and mindset is an important part of effectively fighting money laundering, and that culture and mindset can only be fostered through good habits and practices in the operations of local companies and institutions.
Before this development, some government officials led by Jason Hsu launched a self-regulatory body for the country’s cryptocurrency and blockchain industry. The Taiwan Crypto Blockchain Self-Regulatory Organisation is a voluntary coalition of industry participants tasked with drafting policies for the sector. These new provisions on anti-money laundering are possibly a result of various dialogues between the TCBSRO and the FSC.
Last year, the country’s lawmakers passed the Financial Technology Innovations and Experiments Act to create a “sandbox” for innovative fintech companies. Companies that meet the law’s assessment will be allowed to operate without regulatory risks (for a specific period). ICOs for example who gain the approval of the FSC will be allowed to bypass certain regulatory requirements.
Money Laundering Prevention Efforts in The Cryptocurrency Industry
Money laundering is a primary concern for governments and institutional investors alike. Its use in virtual currency fraud cases appears to be on the rise. In September, Sydney police arrested a married couple suspected of using virtual currencies to launder $300,000. In Israel, police seized a wallet containing over 1,000 BTC in connection to a fraud case.
Though anti-money laundering regulatory frameworks exist for traditional financial transactions, there are calls for crypto-specific provisions.
The FATF recently announced plans to issue laws regulating digital currencies in line with its global anti-money laundering standards. As reported by Ethereum World News, the international regulator has amended its standards to include cryptocurrency transactions. Starting from June 2019, it will issue these amendments and offer guidelines for implementation.