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Taiwan Tightens AML Legislation to Remove Crypto Anonymity

Taiwan has amended its AML legislation to incorporate cryptocurrency transactions into state law.

Pro crypto congressman Jason Hsu proposed the amendment to the country’s Money Laundering Control Act last month in a bid to make cryptocurrencies face the same legal recourse as traditional financial instruments, in addition to several added rules specific to cryptocurrency. Hsu’s hope was that by providing a solid legal framework, investors will be encouraged into the market, while the new regulations could help inform citizens on the emerging technology.

Now that the new law has been passed, Taiwan’s Financial Supervisory Commission (FSC) can place the onus on exchanges to conduct their own vetting and verification processes, which will now require users to use their own names and not hide behind an alias. This means that banks could now put pressure on exchanges for not observing AML and KYC guidelines.

Cryptocurrency exchanges can now expect to receive fines for non-compliance to accompany the new rules. Non- financial institutions can expect fines from between USD 7,300 and USD 145,000, while financial institutions will receive much more significant penalties for non-compliance from between USD 73,000 and USD 1.45 million.

The FSC had amended the original AML legislation in 2016 but it is thought that the changes had made no significant impact on financial crime. The Ministry of Justice sees the new rules as far more in keeping with international standards.

In response, a spokesperson from cryptocurrency exchange BitoEX said the anonymity was only relevant in cases of cryptocurrency-to-cryptocurrency transactions. Any transactions involving fiat had always required the user’s full details and correct name.

Earlier this year, banks in Taiwan ordered the FSC to identify bank accounts offered to Bitcoin trading platforms as “high-risk clients”, requiring transactions through the accounts above a certain threshold to be flagged to the regulator.

The FSC has revealed that it also intends to implement new ICO regulations by June 2019.

 

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