The Legislative Yuan passed the "Anti-Money Laundering Act Amendment Bill" in July last year, with one of the key amendments being "strengthening the supervision of virtual asset services to strictly prevent money laundering through virtual assets". The new Article 6 of the law formally included "virtual asset services" for the first time, and it came into effect on November 30 last year.
Since then, whether it is an exchange or an individual cryptocurrency trader, they all need to complete the anti-money laundering registration with the competent authority. Failure to register as required by law will constitute a criminal offense, punishable by imprisonment of up to 2 years, detention, or a fine of up to 5 million NTD, and the legal person may be fined up to 10 times the amount.
As for the exchanges that have previously passed the anti-money laundering declaration, according to the transitional provisions specially formulated by the Financial Supervisory Commission, the operators in Taiwan who have completed the anti-money laundering compliance declaration must register with the Financial Supervisory Commission by March 31 this year, and complete the formal registration by September 30, otherwise they will not be allowed to continue operating the virtual asset business.
First Illegal Individual Cryptocurrency Trader Case After New Law Implementation
According to a report in the Taiwanese media Liberty Times on this (9th) day, a 30-year-old man surnamed Chen from Kaohsiung became the first illegal individual cryptocurrency trader case discovered after the new regulations came into effect.
According to the police, since October last year, Chen has been posting messages in virtual currency-related communities, claiming "you can find me to exchange currencies", and arranging private transactions to sell USDT. The two parties would meet in Kaohsiung, and the buyer would pay in cash, and Chen would immediately transfer the corresponding amount of virtual currency to the buyer's designated wallet.
Within the short one month before Chen's arrest after the new law came into effect, he completed at least hundreds of transactions, with a trading volume of up to 400,000 USDT, and illegally profited about 800,000 NTD. The police took action on December 24 last year, arresting Chen and seizing related evidence, including a computer host, mobile phone, money counter, and USDT.
Extended Reading: The End of Individual Cryptocurrency Traders? Taiwan's New AML Law Effective Nov 30, Unregistered Providers of Virtual Asset Services Prohibited
Illegal Cryptocurrency Trader Studio in Taipei, Also Raided by the Police
In addition to individual cryptocurrency traders, the police also raided unregistered physical cryptocurrency trader studios. On the 2nd of this month, the police uncovered an illegal cryptocurrency trader studio called "Yuyou" on Chengdu Road in Taipei. The studio sold USDT at a price 10% higher than the market price, conducted cash transactions, and had employees contact the upper level to complete the virtual currency transfer.
The police investigation showed that the studio's monthly revenue exceeded 200 million NTD, with illegal profits reaching 20 million NTD. The police seized multiple related evidence on the spot and sent the two employees surnamed Lin and Liu to the prosecutor's office for prosecution based on the illegal facts.
Unclear Definition of 'Providing Virtual Asset Services', Risks Legal Disputes
It is worth noting that the community had previously expressed concerns that the definition of "providing virtual asset services" in the amended Anti-Money Laundering Act was not clear, which could lead to erroneous precedents and chaos. For example, if someone helps their friends manage or trade cryptocurrencies, would that also be considered a "virtual asset service"?
If there are disputes between the two parties, could malicious individuals potentially report them for not registering for anti-money laundering, and have the judge determine them guilty based on the Anti-Money Laundering Act? Regarding this concern, an anonymous cryptocurrency industry player previously commented to Blockcast.cc:
The legislators do not understand that the ultimate purpose of cryptocurrencies is to lower the threshold of finance, allowing everyone to use unrestricted financial services. This legislation is actually restricting the use of cryptocurrencies, and cannot fully control the cryptocurrency services provided by the government, which may only lead to more underground transactions.
Definition of Businesses or Individuals Providing Virtual Asset Services
According to the latest announcement by the Financial Supervisory Commission (FSC) on the Money Laundering Control Act, Article 6, Paragraph 2, businesses or individuals providing virtual asset services refer to those who engage in the following activities for others within the territory of Taiwan:
- Exchange between virtual assets and New Taiwan Dollars, foreign currencies, and currencies issued in Mainland China, Hong Kong or Macau.
- Exchange between virtual assets.
- Transfer of virtual assets.
- Custody, management of virtual assets or provision of related management tools.
- Participation in and provision of financial services related to the issuance or sale of virtual assets.
Police Urge: Unregistered Cryptocurrency Traders are Illegal
The police remind that there are currently only 26 operators who have completed the registration of Virtual Asset Service Providers (VASPs) in accordance with the regulations, and the list can be found on the FSC's website. The rest of the unregistered individual cryptocurrency traders and cryptocurrency studios are operating illegally and can be punished with imprisonment of up to 2 years, detention, or a fine of up to NT$5 million.
