Newsletter
Taiwan Executive Yuan designated the scope of the enterprises of “virtual currency platforms and trading business” under the Money Laundering Control Act
Taiwan’s Executive Yuan, authorized under Paragraph 4 of Article 5 of the Money Laundering Control Act (AML Act), issued a ruling (Ref. No.: Yuan-Tai-Fa-Zi-1100167722) on April 7, 2021, interpreting the scope of enterprises of “virtual currency platforms and trading business” under Paragraph 2 of Article 5 of the AML Act, which is expected to take effect on July 1, 2021. The enterprises falling within the designated scope will be subject to the relevant rules applicable to financial institutions under the AML Act, and therefore will have the general obligations of verifying the identities of customers (KYC; know your customers) and suspicious activity reporting. The ruling is summarized as follows:
1. The scope of the enterprises of “virtual currency platforms and trading business” designated by the Executive Yuan covers those who engage in the following activities for others:
(1) Exchange between virtual currency and New Taiwan Dollars (NTDs), foreign currencies or currencies issued by Mainland China, Hong Kong or Macao;
(2) Exchange between virtual currencies;
(3) Transfer of virtual currencies;
(4) Custody and/or administration of virtual currency or providing instruments enabling control over virtual currencies;
(5) Participation in and provision of financial services related to issuance or sale of virtual currencies.
2. Virtual currency is defined by the ruling as a representation of value that can be digitally stored, traded or transferred and can be used for payment or investment purposes which is based on the usage of cryptography and distributed ledger technology or other similar technologies, excluding digital forms of NTD, foreign currencies, or currencies issued by Mainland China, Hong Kong or Macao as well as securities and other financial assets issued according to relevant laws and regulations.
3. Financial institutions and designated non-financial enterprises or personnel, when engaging in the business of virtual currency platforms or trading, shall follow the anti-money laundering rules and regulations set forth by their respective competent authorities.
With the rise of business activities relating to virtual currencies/crypto assets, their relevant anti-money laundering issues have become topics widely discussed in recent years. Pursuant to the above ruling, not only the enterprises of virtual currency platforms , but also the enterprises involving in any custody or transfer of virtual currencies/crypto assets, may fall within the scope of “virtual currency platforms and trading business” designated by the Executive Yuan. Therefore, it is recommended that the relevant market players continue to pay close attention to new developments, including further regulations to be set out by the competent authority, the FSC (Financial Supervisory Commission), regarding the aforementioned anti-money laundering matters, including KYC procedures, internal control system, relevant reporting obligations, etc.