萬國法律事務所

On 22 June 2021 Taiwan’s Financial Supervisory Commission (FSC) completed the process of collecting public comments on the Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platforms or Transactions (the “Regulations”) and the Regulations became effective on 1 July 2021. The key points of the Regulations are summarized as follow:
 
I. Definition and Scope of "virtual trading platform and business"
 
The "virtual platform and trading operators" ("VASP operators") are defined the same as they are in "Order No. 1100167722" issued by Taiwan’s Executive Yuan on 7 April, and are those entities who engage in the following activities.
 
1. Exchanges between virtual currencies and NTD, foreign currencies, and currencies issued by China, Hong Kong, and or Macau.
 
2. Exchanges between virtual currencies.
 
3. Transferring virtual currencies.
 
4. Maintain and manage virtual passwords or provide related management tools.
 
5. Participate in and provide financial services related to the issuance or sale of virtual futures.
 
II. Key points of the Regulations
 
The Regulations operate under the Money Laundering Control Act (the “Act”).  In accordance with Article 5(2) of said Act, VASP operators are subject to the provisions of the Act regarding financial institutions, including the establishment of money laundering prevention internal control and audit systems, customer identification, record keeping, reporting of transactions above a certain amount, and reporting of suspected money laundering or counterfeit transactions.  
 
With respect to the above obligations, the Regulations further specify the scope, procedures, and methods by which VASP operators must comply with the relevant obligations, including, inter alia:
 
1. Requirements regarding customer identification, enhanced customer identification, and continuous customer identification review.
 
2. Requirements that VASP operators must follow when conducting virtual pass-throughs.
 
3. Requirements for record keeping.
 
4. Requirements for reporting transactions above a certain amount.
 
5. Requirements for ongoing monitoring of customer transactions and reporting of suspected money laundering or terrorist transactions.
 
6. VASP operators must comply with the notification methods and procedures set forth at Article 7, Paragraph 3 of the Counter-Terrorism Financing Act.
 
7. Implementation of an internal control and audit system for the prevention of money laundering and to combat terrorism.
 
Once the Regulations became effective, VASP operators must comply with the requirements related to anti-money laundering and combating the financing of terrorism.  
 
Although the Regulations specify the items with which compliance by VASP operators is mandatory for the prevention of money laundering and to combat the financing of terrorism, the FSC does not appear to have complete business supervision authority over VASP operators, as VASP operators are not required to obtain prior permission from the FSC in order to operate. 
 
Given the FSC’s lack of complete business supervisory authority over VASP operators, whether the FSC can effectively conduct anti-money laundering measures and combat the financing of terrorism in connection with transactions carried out by VASPs will be a focus of ongoing observation.