The Asia Pacific Group on Money Laundering (APG) visited Taiwan on November 5, 2018 to commence the third-round assessment over the country's anti-money laundering practices. In order to avoid an underperforming assessment result, which would lead to the limitation of the overseas business operations of financial institutions, stringent scrutiny over the overseas investment by Taiwan citizens, and an adverse impact on the international reputation of Taiwan, the Legislative Yuan amended the "Money Laundering Control Act" on November 2, 2018. The amended Money Laundering Control Act not only strengthens the legal compliance requirements of the internal audit and control of financial institutions and includes virtual currency platform and trading business within the regulatory scope but also expands the extraterritorial jurisdiction of the Money Laundering Control Act.
The major content of the amendments of the "Money Laundering Control Act" is as follows:
1.Virtual currency platform and trading business shall be included in the scope of the Money Laundering Control Act, which shall be subject to the provisions relating to financial institutions (Article 5);
2.Financial institutions and designated non-financial enterprises or personnel shall establish their own anti-money laundering policies and procedures based on their money laundering and terrorism financing risks and business scale, including preparing and updating the assessment reports of AML/CFT and audit procedures periodically. Financial institutions may be subject to a fine between NT$500,000 and NT$10,000,000, while designated non-financial enterprises or personnel between NT$50,000 and NT$1,000,000 if breaching the relevant rules (Article 6); and
3.The extraterritorial effect of Money Laundering Control Act is expanded, which means a money laundering offense can be committed regardless whether the conduct or the result of such an offense takes place within the territory of Taiwan (Article 16).
Given that the Financial Action Task Force on Money Laundering (FATF) had issued an alert in 2015 emphasizing the risk of money laundering of virtual currency and also a recommendation in October this year providing that virtual currency shall be subject to anti-money laundering regulations, the "Money Laundering Control Act" was amended to cover virtual currency platforms and trading business to perfect Taiwan's anti-money laundering system. In the meantime, the Executive Yuan determined that the Financial Supervisory Commission (FSC) shall be the competent authority to govern all matters regarding anti-money laundering of virtual currency under the "Money Laundering Control Act", and thus the FSC will promulgate the relevant rules in due course.