Taiwan Finally Amends Anti-Money Laundering
On Friday November 2, Anti-Money Laundering and Terrorism Financing laws were amended by the Legislative Yuan which is the Taiwan-based unicameral legislature of the Republic of China, in order to regulate virtual currencies transaction in order to avoid financial crimes that might arise by using these currencies. Under these amendments, the Financial Supervisory Commission can track anonymous virtual currency transactions and crack them down. This was first announced by FocusTaiwan, which is Taiwan’s national news agency on November, 2nd.
This has been a long-awaited move as it has been the topic from different officials in Taiwan. It is also a move that follows news circulating around in Taiwan in 2018 regarding cryptocurrency transactions holding the same regulatory standards as fiat currency in relation to Money Laundering and Terrorism Financing laws. This was also backed up by a proposal and press release by Taiwanese legislator Jason Hsu to regulate virtual currencies. According to the release, it was stated that:
“Once it takes effect, cryptocurrency exchanges in Taiwan will be accountable for anti-money laundering. Upon this foundation, customer reviews, transaction record keeping, and reporting suspicious transaction reports will all categorized as the obligations of anti-money laundering,”
This amendment also follows a call by Taiwan’s Minister of Justice, Qiu Tasin when he stated that cryptocurrencies should be regulated by November in order to avoid Money Laundering.
This however, does not come as a surprise because in October 2017, Wellington Koo, the then Taiwan FSC chairman stated that unlike China and South Korea’s decisions to ban any crypto-related activities, Taiwan will instead have a friendlier and supportive stance towards the adoption and development of both cryptocurrency and blockchain as emerging technologies.
In alignment with the new legislation, the FSC has the power to demand that virtual currency platforms ensure that their users use their real names when transacting bitcoin, ethereum and any other virtual currencies. If the platforms do not follow that provision, banks have the authority to reject anonymous and suspicious virtual currency transactions and report them to the FSC. This might push these virtual currency platforms to enacting Know-Your-Customer processes within their systems so as to ensure that the transactions are backed by actual people and can easily be barred if they are suspicious.
The effectiveness of the Taiwan AML System
According to the Ministry of Justice, the amendments are meant to align Taiwan with international standards and simultaneously increase the effectiveness of the Taiwan AML system so as to build a culture that supports and values legal compliance. Moreover, the Ministry has admitted that their Anti-Money Laundering Act that was amended in 2016 has not been able to fully prevent related financial crimes. However, the constant amendment of the act, is set at bettering Taiwan’s current state in its upcoming evaluation by the Asia/Pacific Group on Money Laundering (APG) that will be taking place from November 5th 2018 to November 16, 2018. The APG is an inter-governmental organisation that consists of 41 member jurisdictions, inclusive of Taiwan with the aim of ensuring that its members are effectively implementing international standards against money laundering, terrorist financing and proliferation financing related to weapons of mass destruction.