Taiwan and Singapore Strengthen AML Regulations for Virtual Asset Providers and Banks

Taiwan and Singapore enhance Anti-Money Laundering (AML) regulations for virtual asset service providers and banks, aiming to control the illicit flow of money through the country’s legal financial systems.

Taiwan’s parliament has brought up significant amendments to the country’s AML regulations, mandating cryptocurrency exchanges and Virtual Assets Service Providers (VASPs) to register for AML compliance, further taking strict actions against unqualified VASPs. 

Upon the enforcement of the new rule, individuals and businesses using or providing crypto services in the country must comply with AML laws and register their service capacity. However, failure to meet AML compliance requirements can result in a fine of up to $153,800 and imprisonment for up to two years.

According to the recently passed amendments, overseas crypto platforms are obliged to set up local entities along with applying for AML registration, or would face regulatory sanctions or penalties.

Currently, Taiwan requires VASPs to comply with Financial Supervisory Commission’s regulation inline with the AML framework since July 2021, otherwise, the cryptocurrency industry remains unregulated. Huang Mou-hsin, Deputy Minister of Justice stated that currently the regulatory authorities can only impose penalties on non-compliant VASPs.

Additionally, Kevin Chen, Secretary General of the Taiwan Fintech Association, stated that this time, it will be challenging for non-compliant crypto firms to meet the new AML requirements.

“They will face a state of ‘not knowing when the review standards will be finalized, leading to prolonged waiting. They may even have to start over once the registration standards are announced,” Cheng said. “Those that have completed AML registration may temporarily continue their operations, but they will inevitably face stricter reviews in the future,” he added.

Like Taiwan, Singapore is also seeking to standardize its regulations for the banking sector, aiming to stop illicit flow of money after the country witnessed a multi-billion dollar money laundering case.

However, the country already had strict anti-money laundering regulations, yet lenders vary in their execution of AML processes. The country has convicted all ten criminals involved in a $2.2 billion money laundering case, which was done through dozens of local banks.

“The money laundering case of the past year has not changed our growth trajectory nor our position on regulatory standards,” Chia said. Still, “what is needed is to set a clearer waterline of practices across the industry, rather than a tightening of standards and requirements.” Chia’s remarks confirmed earlier reporting by Bloomberg News on the move to come up with consistent standards in the banking sector.

The comments also highlighted the importance of maintaining Singapore’s reputation as a top global financial hub that is the most crucial reason for boosting businesses at banks. Assets managed by the banks spiked by 10% as compared to the last year. 

In response to a question, Chai said banks will continue to experience growth in assets despite the wealth flow having slowed after last year’s money laundering scandal. Singapore doesn’t “see things in terms of a race or competition with other centers”, he said, referring to rivalry with other wealth hubs like Dubai and Hong Kong.

In order to enhance the effectiveness of the banking sector’s fraud prevention systems, the Monetary Authority of Singapore (MAS) is all set to offer S$100 million in funding to financial institutions to fast-track AI and quantum computing projects. 

Suggested Reads:

Singapore and Europe Enhance AML Framework to Fight Financial Crimes Effectively

Singapore, Cyprus, and the US Expedite Efforts to Combat Financial Crimes Effectively

MFSA, SEC, Along with FCA Introduces New AML Guidelines for Money Laundering Officers and Virtual Asset Service Providers