Regulation
Taiwan sets its sights on crypto companies with strict new prison sentencing laws
Taiwan sets its sights on crypto companies
The Taiwan Ministry of Justice has propose changes aimed at strengthening anti-money laundering (AML) measures within the crypto industry.
If adopted, the new proposals will mark a substantial shift from the current regime, in which non-compliance by digital currency companies is punished with administrative sanctions, towards a stricter legal framework that includes criminal sanctions for serious violations .
From crypto administrative sanctions to criminal charges
These changes are part of Taiwan’s ongoing efforts to align its regulatory environment with global standards, especially as digital assets play an increasingly important role in the financial sector.
The proposed legal framework would require domestic and international cryptocurrency companies operating in Taiwan to register and demonstrate compliance with AML regulations. Failure to comply with these requirements could result in serious consequences, including imprisonment.
Under the current system, Taiwanese authorities have limited powers, mainly limited to imposing fines on companies that do not comply with AML protocols, according to Vice Minister of Justice Huang Mou-hsin. However, the changes recently proposed by the Ministry of Justice aim to intensify the severity of sanctions.
Huang Mou-hsin highlighted that these changes would criminalize violations of AML regulations by crypto companies, shifting the landscape from administrative oversight to law enforcement.
The draft amendments stipulate that non-compliant companies could be sentenced to “two years” in prison. Additionally, foreign crypto platforms seeking to serve Taiwanese customers must establish a local presence and undergo the AML registration process.
Expanding the scope of AML laws
The proposed amendments target compliance for crypto companies and aim to incorporate specific provisions for digital assets into Taiwan’s existing AML legislation.
Under the proposals, people using cryptocurrencies for money laundering could face prison sentences ranging from six months to five years. They can also face fines of up to NT$50 million (about $1.5 million).
This explicit inclusion of cryptocurrencies in AML laws signifies a comprehensive approach to combating financial crime in the digital age.
The proposed changes must now be considered by the Legislative Yuan, Taiwan’s national parliament. This step is crucial for the amendments to become law and reflects the government’s commitment to creating a “robust” regulatory framework for the booming crypto industry.
It should be noted that Taiwan has systematically regulated its crypto marketintroducing several guidelines and rules in recent years.
The Financial Surveillance Commission (FSC) introduced anti-money laundering rules for digital currency service providers in July 2021. However, beyond these AML requirements, the broader digital currency sector has remained relatively unregulated.
The recent FSC report “Guiding Principles for Managing Virtual Asset Platforms and Transaction Businesses” further underlines this cautious expansion of regulation.
These principles establish standards for customer protection, including transaction transparency, asset custody and internal control management.
They also define operational constraints for offshore digital currency platforms, which prohibit companies from conducting business in Taiwan without proper registration and AML compliance declaration.
Featured image from Unsplash, chart from TradingView