Articles 5, 6, 9~11, 16, 17, 22 and 23 of the Money Laundering Control Act (hereinafter, the “Law”) were amended and implemented on November 7, 2018. The amendments are highlighted below:
1. Incorporation of cryptocurrencies into anti-money laundering regulations (Article 5, Paragraph 2 of the Law)
To accommodate the money-laundering risks for cryptocurrencies pursuant to a warning issued by the Financial Action Task Force on Money Laundering (hereinafter, the “FATF”). And in reference to relevant legislative examples in several countries, most of which have at least included cryptocurrencies under a low level of regulation for money laundering control in their legal regimes. Cryptocurrency platforms and trading business are included in the scope of anti-money laundering regulations by amending Article 5, Paragraph 2 of the Law as: “Enterprises that handle financial lease, cryptocurrency platforms and transactions shall be governed by the provisions concerning financial institutions under this Law.”
2. Mandatory requirement for internal control and audit systems for preventing money laundering, and imposition of a fine for violation (Article 6 of the Law).
Although the internal audit and control systems are required for certain financial institutions under current Taiwan laws and regulations, still the current provisions of the Law concerning internal audit and control systems are only administrative guidance without compulsory effect, which not only fails to meet international requirements but also undermines the effectiveness in the implementation of anti-money laundering policies. Therefore, Article 6, Paragraph 1 of the Law is amended to compel financial institutions and designated non-financial institutions or personnel to set up anti-money laundering internal control and audit systems based on their risks and business scale. In addition, the penalty for violation of such internal audit and control provisions is specifically stipulated in Paragraph 4 of the same article.
3. Expansion of the scope of subjects exempt from business confidentiality obligations (Articles 9 and 10 of the Law)
The subjects exempt from confidentiality obligations for reporting “block transactions” or “suspicious transactions” were previously limited to only “financial institutions” and “designated non-financial enterprises or personnel” under Article 9, Paragraph 2 and Article 10, Paragraph 2 of the Law. However, the representatives, directors, managerial officers and staff of such institutions or enterprises, who is likely to be exposed to the suspicious transaction reporting information, are not specifically released of their business confidentiality obligations. For avoidance of doubts, the subjects whose confidentiality obligations may be exempt are added. After these amendments, the subjects whose confidentiality obligations may be exempt are:
(1) Financial institutions.
(2) Designated non-financial enterprises or personnel.
(3) The representatives, directors, managerial officers and staff of the above institutions or enterprises.