Taiwan Bankers' Association Amendment: Exchange users can withdraw to different banks, and enhanced regulation on opening accounts with overseas exchanges

The Banking Association recently passed a key amendment aimed at strengthening the cooperation norms between banks and virtual currency trading platforms, while enhancing the security and convenience of transactions, seen as a significant step in combating illegal activities such as money laundering.

Bankers' Association Amendment: User Accounts More Flexible, Responsible for Monitoring Exchange Customers

Open Users Can Have Accounts with Different Banks Under the Same Name

In the past, the regulations of the Bankers' Association required operators and users of virtual currency exchanges to conduct transactions using accounts from the same bank for better control of fund flows.

However, this requirement has caused many operational difficulties. Therefore, the new amendment allows operators and users to use accounts from different banks for transactions, as long as the account name matches the user's name. This change not only increases the convenience of transactions but also reduces operational hassles.

Requirement for Exchanges to Strictly Monitor Fund Flows

To further prevent money laundering and other illegal activities, the new amendment requires platform operators to monitor fund flows rigorously. Any funds involved in virtual currency transactions must be transferred from a deposit account under the same name as the user. This requirement effectively prevents funds from being transferred to another account, thereby reducing the risk of money laundering.

New Roles and Responsibilities of Banks in the Virtual Currency Industry

This amendment also emphasizes the roles and responsibilities of banks in providing fund custody services. Banks need to ensure that the fund custody services they provide are based on trust or in the form of full performance guarantee. Furthermore, banks should assess the business scope of platform operators when providing services and implement corresponding internal control mechanisms based on the level of risk.

Strict Verification of Exchange User Identity and Compliance

The new regulations also include identity verification requirements for Virtual Asset Service Providers (VASPs) engaged in virtual asset platforms and trading businesses. Platform operators must confirm compliance with anti-money laundering regulations, especially for overseas clients, by verifying their registration or approval status in relevant countries to ensure their legitimacy and transparency.

Requirements for Overseas Exchange Account Opening for Anti-Money Laundering Qualifications

The Bankers' Association stated that for overseas clients, banks must ascertain whether the establishment or operation of the client is registered with the anti-money laundering regulatory or business supervisory authorities of the country, such as the Financial Crimes Enforcement Network (FinCEN) in the United States or the Financial Services Agency (FSA) in Japan.

Reminder Regarding Exchanges Promoting MSB Qualification Many overseas exchanges declare themselves as Money Services Businesses (MSBs) to the U.S., but registering as an MSB does not mean they are endorsed by FinCEN's supervision. It is merely a registration with the government. The MSB license itself does not provide protection to U.S. overseas investors; it only serves as a basis for the company to comply with anti-money laundering and counter-terrorism financing regulations. Whether cryptocurrency investors are protected depends on whether the company is regulated and supervised in the jurisdiction where the users are located. If the business involves derivatives such as contracts, futures, or options, it is not within the scope of MSB regulation.