Taiwan’s New AML Law: Jail Time for Illegal Crypto Operators

Taiwan's parliament has approved new changes to its anti-money laundering (AML) laws. These changes require cryptocurrency firms to register for AML compliance, making it illegal for unqualified crypto service providers to operate. The Legislative Yuan passed these amendments late Tuesday, according to the Central News Agency.

When the new rules come into effect, anyone offering cryptocurrency services in Taiwan must follow AML procedures and register their services. If they fail to do so, they could face up to two years in prison or fines of up to NT$5 million ($153,800).

The updated regulations also require foreign crypto platforms to set up local entities and register for AML compliance. If they do not comply, they could face criminal charges.

Since July 2021, Taiwan has required crypto service providers to follow AML laws, according to the rules introduced by the Financial Supervisory Commission (FSC). Despite these rules, the crypto industry is still mostly unregulated. In May, Deputy Minister of Justice Huang Mou-hsin said that authorities could only impose administrative penalties on firms that do not comply with AML laws.

Kevin Cheng, a crypto lawyer and secretary-general of the Taiwan Fintech Association, shared his concerns about the new requirements. He said it would be a “difficult situation” for businesses that have not completed AML declarations when the new rules take effect. 

These businesses will face uncertainty because they will not know when the review standards will be finalized, leading to long waiting periods. They might even have to start the process over once the registration standards are officially announced.

Cheng also noted that firms that have already completed AML registration can continue operating temporarily. However, they will face stricter reviews in the future, making ongoing compliance more challenging.

The FSC is also considering a special law for crypto assets. FSC Chair Jin-Lung Peng announced that this proposal would be submitted to the Executive Yuan, Taiwan's top administrative body, in June 2025.

Last month, the local cryptocurrency sector made a significant move by establishing an industry association. This association aims to create self-regulatory rules that align with government guidelines, helping to develop a more organized and compliant industry environment.