FSC announces new regulations on anti-money laundering measures for virtual asset services: removal of AML declaration, operators must register within three months.

In order to strengthen anti-money laundering and counter-terrorism financing measures for virtual asset service providers, the Financial Supervisory Commission (FSC) recently announced the draft regulations for "Registration Measures for Businesses or Individuals Providing Virtual Asset Services for Anti-Money Laundering" (referred to as VASP Registration Measures) and the amended draft of "Anti-Money Laundering and Counter-Terrorism Financing Measures for Virtual Currency Platform and Trading Business Operators" (referred to as VASP AML/CFT Measures). These two regulatory drafts will regulate the registration system, business scope, and related prevention measures for virtual asset service providers.

With the addition of another entity to Taiwan's VASP AML/CFT declaration, will it still be profitable after the registration system is implemented?

Key Points of the Draft Registration Regulations for VASPs

The draft registration regulations for Virtual Asset Service Providers (VASPs) consist of 31 articles, mainly regulating the business categories of virtual asset service providers, the registration system, and registration procedures. The key points of the content are as follows:

Categories of Business and Implementation of Registration System

Virtual asset service providers are categorized into exchange operators, trading platforms, transferors, custodians, underwriters, etc., and are required to conduct anti-money laundering registration based on the nature of their business as stipulated in Articles 2 and 3.

Clear Conditions and Procedures for Registration System

The draft specifies the qualification requirements for responsible persons or beneficial owners in Article 4, and the documents required for registration and application procedures in Article 5. Furthermore, it clearly defines the operational period, business termination procedures in Article 6, and the reasons for refusal, revocation, or cancellation of registration in Articles 7 and 8, detailing the procedures for registration document changes in Article 9.

Enhanced Regulatory Requirements for Operators

The draft provides detailed regulations for the management of operators, including legal compliance, information systems and security, customer complaint handling, information disclosure, and record-keeping in Articles 10 to 15. Additionally, specific provisions must be complied with for different business categories, such as exchange operators in Articles 16 and 17, trading platforms in Articles 18 to 21, transferors in Article 22, custodians in Articles 23 to 27, and underwriters in Articles 28 and 29.

Transitional Provision: Registration within 3 Months

Virtual asset service providers who have completed the anti-money laundering compliance declaration must register with the Financial Supervisory Commission within 3 months after the registration system takes effect and complete the registration within 9 months after the implementation of these regulations as stated in Article 30.

Key Amendments to the VASP Anti-Money Laundering Regulations

The revised VASP anti-money laundering regulations have been adjusted to align with the implementation of the new system, focusing on the following key points:

Name and Article Amendments

In accordance with the amendments to the anti-money laundering laws, the name of the VASP anti-money laundering regulations has been changed to "Regulations for Preventing Money Laundering and Combating the Financing of Terrorism for Businesses or Individuals Providing Virtual Asset Services," and relevant articles (Articles 2 to 17) have been updated accordingly.

Establishment of Registration System and Applicable Entities

To comply with the new regulations, it is specified that the scope of application of these regulations is for those who have completed registration under the VASP registration regulations (Article 2).

Risk Assessment Report

Virtual asset service providers are required to prepare an annual risk assessment report and submit it to the Financial Supervisory Commission (Article 14).

Internal Controls and Audit System

A new provision stipulates that virtual asset service providers must establish internal controls and audit systems in accordance with the anti-money laundering law, anti-terrorism financing law, VASP registration regulations, and self-regulatory rules of the Virtual Currency Business Association (Article 15).

Abolition of Anti-Money Laundering Compliance Declaration

The requirement for virtual asset service providers to make an anti-money laundering compliance declaration has been removed (Article 17).

Considerations After the Implementation of the Registration System

The Financial Supervisory Commission reminds that with the implementation of the VASP registration system, the current compliance declaration system will be simultaneously abolished. All operators, regardless of whether they have completed the compliance declaration, must follow the registration requirements under the VASP registration regulations. Therefore, the Financial Supervisory Commission suggests that operators intending to engage in virtual asset services carefully consider whether to wait for the registration system to take effect before submitting applications to avoid the inconvenience of reapplying under different regulations in a short period.

The Financial Supervisory Commission stated that the draft will be announced in the Government Gazette and on the Financial Supervisory Commission's website. Stakeholders who have any opinions can express them on the "Draft Notice" page of the Financial Supervisory Commission's "Regulatory Inquiries System" website within 30 days from the day following the announcement of the draft.