Taiwan passes new AML legislation to imprison illegal operators for up to two years

Taiwan’s parliament passed amendments to the anti-money laundering laws requiring crypto firms to register for AML compliance, further criminalizing unqualified crypto service providers. The Legislative Yuan passed the amendments in a third reading late Tuesday, the semi-official Central News Agency reported.

When the new rules take effect, businesses or individuals providing crypto services operating in Taiwan must complete AML procedures and register their service capacity. Failure to do so may result in imprisonment for up to two years or a fine of up to NT$5 million ($153,800).

According to the newly passed rules, overseas crypto platforms will need to set up local entities and apply for AML registration, or they may face criminal penalties.

Currently, Taiwan requires crypto service providers to comply with AML laws since the Financial Supervisory Commission introduced relevant rules in July 2021. Otherwise, the crypto industry remains largely unregulated. Deputy Minister of Justice Huang Mou-hsin said in May that the authorities can currently only impose administrative penalties on non-compliant crypto firms.

Kevin Cheng, a crypto lawyer and secretary general of the Taiwan Fintech Association, told The Block that it will be a “difficult situation” for businesses that have yet to complete AML declarations when the newly passed requirements take effect. 

“They will face a state of ‘not knowing when the review standards will be finalized,’ leading to prolonged waiting. They may even have to start over once the registration standards are announced,” Cheng said. 

Those that have completed AML registration may “temporarily continue their operations but they will inevitably face stricter reviews in the future,” he added.

Meanwhile, the FSC is mulling a special law proposal for crypto assets that it plans to submit to the Executive Yuan, Taiwan’s highest administrative organ, in June 2025, FSC Chair Jin-Lung Peng said at the parliament last week.

Last month, the local crypto sector officially established an industry association to formulate self-supervisory rules under the government’s guidelines.