TAIWAN Trends and Developments Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
cating their compliance with the AML Act and the AML Regulations. As a latest update, the Taiwan AML Act was amended in July 2024. According to this amend - ment, crypto-related service providers, referred to as “virtual asset service providers” (VASPs), are required to complete the “Anti-Money Laun - dering Registration” with the FSC before offering their services. Additionally, any offshore VASPs must establish a company or branch office in compliance with the Company Act, and must complete the aforementioned registration prior to providing services within Taiwan. Violations of these provisions may result in imprisonment for up to two years, detention or a criminal fine of up to NTD5 million, either in place of or in addition to imprisonment. Further - more, if the criminal offence is committed by a juristic person, the entity itself will also face a criminal fine. In summary, any VASP operating in Taiwan with - out prior completion of the “Anti-Money Laun - dering Registration” with the FSC will be subject to criminal liability under the newly amended AML Act. The aforementioned amendment is expected to take effect at the end of 2024. In September 2023, the FSC announced a set of “VASP Guidelines” under the AML Act. The VASP Guidelines cover the following require - ments, among others. • Obligations of an issuer regarding the issu - ance of virtual assets, such as announcement of the “White Paper” on the issuer’s website – the White Paper should contain information such as: (a) the details of the issuer; (b) the description of the issuance project;
(c) issuance amount and price; (d) the conditions for subscription; (e) relevant rights and obligations in relation to the virtual assets; (f) disclosure of technologies used; and (g) associated risks. • VASPs’ standards and procedures for review - ing the launching of virtual assets – the reviewing standards should include: (a) the issuer’s compliance status; (b) the liquidity of the virtual asset; (c) whether the price of the virtual asset has been manipulated; (d) the existence of the issuer; and (e) whether there is any inappropriateness, misrepresentation or fraud involved in the advertisement and business solicitation of the virtual asset. • The custody and segregation of VASPs’ assets and customer assets; in the case of fiat money, there should be a trust or bank performance guarantee. The CPA’s report on the customers’ assets would be required at least every year. • Fairness and transparency of transactions, under which VASPs should set out the trad - ing rules for virtual assets and incorporate this into the VASPs’ internal control systems. Information regarding the matched trades should be disclosed and made available to customers in a timely manner. VASPs should also have in place a relevant mechanism for ensuring fairness of the trading in the market, including a mechanism that may indicate abnormal prices as well as aid the prevention of market abuse and conflict of interests. • Management mechanisms of operation, information security (considering the types, quantities and nature of the information kept or handled, and the scale and nature of the IT system), and cold and hot wallets.
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