August 2024
Taiwan Passes Virtual Asset Service Provider Registration Regime ─ FSC Strengthens VASP Supervision Through Anti-Money Laundering Measures
August 2024
Aaron Chen and Lilian Hsu
Taiwan's regulatory measures for virtual asset service providers (the “VASPs”) focus on the field of anti-money laundering in particular. The Financial Supervisory Commission (the “FSC”) promulgated the “Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platform and Transaction”(the “VASP AML Regulations”) in June 2021, incorporating VASPs into the anti-money laundering framework. Recently, in July 2024, the Legislative Yuan passed an amendment to the Money Laundering Control Act, including the addition of the "VASP Registration Regime," which is particularly noteworthy. Below is an explanation of both the registration regime and related enforcement activities by the FSC.
1. VASP Registration Regime
Under the pre-amendment regime, businesses providing virtual asset services within Taiwan were required to complete an anti-money laundering declaration in accordance with the VASP AML Regulations before offering such services. Violators would be fined between NT$50,000 and NT$1 million (Article 17 of the VASP AML Regulations; Article 6(4) of the former Money Laundering Control Act). According to FSC announcements, as of July 2024, 26 businesses had completed their anti-money laundering declarations under these regulations[1].
The recent amendment to the Money Laundering Control Act introduces a new VASP Registration Regime, requiring businesses to apply for and complete anti-money laundering registration with the FSC before they can provide virtual asset services within Taiwan. Individuals violating this requirement will face imprisonment for up to two years, detention, and/or fines up to NT$5 million; legal entities will face fines up to NT$50 million (Article 6(1), (4), (5) of the Money Laundering Control Act). The application conditions, procedures, and other compliance requirements for this registration regime will be determined by the FSC (Article 6(2) of Money Laundering Control Act).
2. FSC’s Current Enforcement Activities on VASPs
Although the VASP Registration Regime has not yet been officially implemented—the implementation date will be announced separately by the Executive Yuan (Article 31 of Money Laundering Control Act)—relevant businesses should note that the FSC has recently intensified its enforcement regarding VASPs' compliance with anti-money laundering laws. Specific measures include:
Compared with past practices where operating a virtual asset business without completing an anti-money laundering declaration only resulted in administrative penalties, the amendment of the Money Laundering Control Act stipulates that operating without registration will incur criminal penalties. In addition, the fine amounts have significantly increased, and the violators could even face imprisonment for up to two years, making the legal liability quite severe. Despite the VASP Registration Regime has not been implemented yet, considering the FSC’s increased focus on anti-money laundering compliance in the VASP industry and shows trends towards strengthened enforcement activities, VASPs must continuously review and ensure their internal AML policies—such as KYC, continuous transaction monitoring, and record-keeping—comply with regulatory requirements to avoid legal violations.
[1] The FSC announces a list of VASPs that have completed the anti-money laundering declarations:https://www.fsc.gov.tw/userfiles/file/(%E7%AC%AC4%E9%BB%9E)%E5%B7%B2%E5%AE%8C%E6%88%90%E6%B4%97%E9%8C%A2%E9%98%B2%E5%88%B6%E6%B3%95%E4%BB%A4%E9%81%B5%E5%BE%AA%E8%81%B2%E6%98%8E%E7%9A%84%E8%99%9B%E6%93%AC%E9%80%9A%E8%B2%A8%E5%B9%B3%E5%8F%B0%E6%A5%AD%E8%80%85%E5%90%8D%E5%96%AE-%E8%AD%891130704.pdf (Last viewed: August 5, 2024)
[2] The FSC announced the key points of the 2024 annual financial inspection, December 19, 2023, https://www.fsc.gov.tw/ch/home.jsp?id=96&parentpath=0,2&mcustomize=news_view.jsp&dataserno=202312190004&dtable=News ( Last viewed: August 5, 2024)
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.
Aaron Chen and Lilian Hsu
Taiwan's regulatory measures for virtual asset service providers (the “VASPs”) focus on the field of anti-money laundering in particular. The Financial Supervisory Commission (the “FSC”) promulgated the “Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platform and Transaction”(the “VASP AML Regulations”) in June 2021, incorporating VASPs into the anti-money laundering framework. Recently, in July 2024, the Legislative Yuan passed an amendment to the Money Laundering Control Act, including the addition of the "VASP Registration Regime," which is particularly noteworthy. Below is an explanation of both the registration regime and related enforcement activities by the FSC.
1. VASP Registration Regime
Under the pre-amendment regime, businesses providing virtual asset services within Taiwan were required to complete an anti-money laundering declaration in accordance with the VASP AML Regulations before offering such services. Violators would be fined between NT$50,000 and NT$1 million (Article 17 of the VASP AML Regulations; Article 6(4) of the former Money Laundering Control Act). According to FSC announcements, as of July 2024, 26 businesses had completed their anti-money laundering declarations under these regulations[1].
The recent amendment to the Money Laundering Control Act introduces a new VASP Registration Regime, requiring businesses to apply for and complete anti-money laundering registration with the FSC before they can provide virtual asset services within Taiwan. Individuals violating this requirement will face imprisonment for up to two years, detention, and/or fines up to NT$5 million; legal entities will face fines up to NT$50 million (Article 6(1), (4), (5) of the Money Laundering Control Act). The application conditions, procedures, and other compliance requirements for this registration regime will be determined by the FSC (Article 6(2) of Money Laundering Control Act).
2. FSC’s Current Enforcement Activities on VASPs
Although the VASP Registration Regime has not yet been officially implemented—the implementation date will be announced separately by the Executive Yuan (Article 31 of Money Laundering Control Act)—relevant businesses should note that the FSC has recently intensified its enforcement regarding VASPs' compliance with anti-money laundering laws. Specific measures include:
- For the first time in 2024, including VASPs within financial inspections scope to supervise their implementation of anti-money laundering, counter-terrorism financing, and counter-proliferation measures.[2]
- In January 2024, the FSC issued its first penalty against a business operating virtual asset services without completing an anti-money laundering declaration.
- In July and August 2024, the FSC Imposed fines amounting to millions on VASPs for deficiencies in legal compliance with anti-money laundering laws and personal data management.
Compared with past practices where operating a virtual asset business without completing an anti-money laundering declaration only resulted in administrative penalties, the amendment of the Money Laundering Control Act stipulates that operating without registration will incur criminal penalties. In addition, the fine amounts have significantly increased, and the violators could even face imprisonment for up to two years, making the legal liability quite severe. Despite the VASP Registration Regime has not been implemented yet, considering the FSC’s increased focus on anti-money laundering compliance in the VASP industry and shows trends towards strengthened enforcement activities, VASPs must continuously review and ensure their internal AML policies—such as KYC, continuous transaction monitoring, and record-keeping—comply with regulatory requirements to avoid legal violations.
[1] The FSC announces a list of VASPs that have completed the anti-money laundering declarations:https://www.fsc.gov.tw/userfiles/file/(%E7%AC%AC4%E9%BB%9E)%E5%B7%B2%E5%AE%8C%E6%88%90%E6%B4%97%E9%8C%A2%E9%98%B2%E5%88%B6%E6%B3%95%E4%BB%A4%E9%81%B5%E5%BE%AA%E8%81%B2%E6%98%8E%E7%9A%84%E8%99%9B%E6%93%AC%E9%80%9A%E8%B2%A8%E5%B9%B3%E5%8F%B0%E6%A5%AD%E8%80%85%E5%90%8D%E5%96%AE-%E8%AD%891130704.pdf (Last viewed: August 5, 2024)
[2] The FSC announced the key points of the 2024 annual financial inspection, December 19, 2023, https://www.fsc.gov.tw/ch/home.jsp?id=96&parentpath=0,2&mcustomize=news_view.jsp&dataserno=202312190004&dtable=News ( Last viewed: August 5, 2024)
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.
