In a bid to strengthen its anti-money laundering (AML) framework, Taiwan has unveiled proposed amendments that would criminalize non-compliance by cryptocurrency firms, authorities announced today.

Under the proposed changes to existing AML laws, both domestic and overseas crypto entities seeking to operate in Taiwan would be required to register for AML compliance. Failure to adhere to these regulations could lead to imprisonment for up to two years. Deputy Minister of Justice Huang Mou-hsin emphasized that while current regulations only permit administrative penalties for non-compliant firms, the proposed amendments would elevate such violations to criminal offenses.

According to the draft plan, overseas crypto platforms would need to establish local entities and undergo AML registration to avoid criminal penalties. Taiwan's Financial Supervisory Commission had previously introduced AML rules for cryptocurrency service providers in July 2021, although the industry has largely remained unregulated.

In addition to incorporating cryptocurrencies into the AML laws, the proposed amendments also outline penalties for money laundering offenses involving digital assets. Offenders caught using cryptocurrency for money laundering could face imprisonment ranging from six months to five years, along with fines of up to NT$50 million ($1.5 million).

The proposed amendments will undergo review by Taiwan's national parliament, the Legislative Yuan, signaling a proactive approach by authorities to combat financial crimes within the rapidly evolving cryptocurrency landscape.

Meanwhile, Taiwan's crypto sector is taking steps to enhance self-regulation by establishing an industry association, with approval for the application granted by the Ministry of the Interior in March. By adhering to the guidelines set forth by the Financial Supervisory Commission, crypto firms aim to develop self-supervisory rules to bolster industry standards. The industry is expected to finalize all preparatory work and formally establish the association by the end of June, further underscoring Taiwan's commitment to fostering a compliant and transparent cryptocurrency ecosystem.