Prosecutors request to regulate personal currency businesses! FSC responds: Operators who have not completed anti-money laundering declarations are considered illegal.

On 6/17, prosecutors from all over Taiwan and the Financial Supervisory Commission participated in the "Frontline Prosecutors Combat Fraud Practices and Advance Anti-Fraud Strategies Seminar" to discuss the issue of fraud. Prosecutors called for solutions to the chaos in the cryptocurrency market. The Financial Supervisory Commission responded: "Engaging in virtual currency activities without completing anti-money laundering compliance statements is considered illegal." This statement sparked controversy.

Prosecutor: Failure to Regulate Individual Cryptocurrency Traders Will Become a Gap in Anti-Fraud Measures

According to a report by CNA, a prosecutor has expressed concerns that the Financial Supervisory Commission (FSC) has not regulated individual cryptocurrency traders, which could create a loophole in the government's efforts to combat fraud.

FSC: Individual Cryptocurrency Traders Must Register, Failure to Comply with AML Regulations Is Illegal

In response, the FSC stated that under the Regulations Governing Anti-Money Laundering for Virtual Currency Platforms, individuals engaged in virtual currency activities as a business are required to register for business and tax purposes, and comply with AML regulations. Engaging in virtual currency activities without completing the necessary AML compliance is considered illegal. This requirement applies to individuals registered domestically only.

Original statement from FSC: "Referring to individuals engaged in virtual currency activities on behalf of others as virtual currency businesses. Individuals engaged in virtual currency activities as a business are required to register for business and tax purposes in accordance with relevant regulations, and comply with AML laws and related regulations. Engaging in virtual currency activities as a business without completing the necessary AML compliance is considered illegal."

Issues: Individuals? Penalties? AML Review Stagnation?

In response to the FSC's statement, public comments have raised questions about the lack of coverage for individuals in the AML law, the requirement for business and tax registration, the absence of AML compliance statements, penalties, and the rationale behind these measures.

Previously, Legislator Jiang Yong-chang had pointed out the lack of specific penalties by the FSC and questioned how non-compliant entities would be dealt with. The FSC had responded that they would rely on AML laws and bank controls to regulate the industry, leaning towards observation before considering legislative amendments.

Looking back at the FSC's statements: While many countries have clear regulations on virtual currencies, is Taiwan's FSC relying solely on industry self-regulation?

Furthermore, the last update to the AML compliance statement list by the FSC was on February 20, 2023. It has been four months since any new entities were added, and the responsibility for updates has now been transferred to the Securities and Futures Bureau.