Taiwan’s highest legislative body, the Legislative Yuan, has officially passed a law amending the country’s Anti-Money Laundering (AML) legislation to include digital assets. The law now requires virtual asset service providers (VASPs) in the region to adhere to AML policies.

According to reports, firms seeking to offer virtual asset services or third-party payment services in Taiwan must establish an AML system and report their capacity. Additionally, those who fail to comply with the amended rules face hefty fines.

Non-compliance with the new laws could result in prison sentences of up to two years and fines up to 5 million New Taiwan Dollars ($153,000). The Legislative Yuan states that the new laws aim to “strengthen fraud prevention operations, combat fraud rings, and protect victims, with fraud prevention measures in the financial, telecommunications, and digital economy areas.”

Virtual asset service providers will also be required to monitor transactions and report suspicious transactions involving digital assets to the law enforcement. An inter-bank inquiry mechanism has been put in place for the verification of these transactions and freeze the funds before it is too late.

Also, in order to protect victims’ rights, digital asset platforms must promptly return any remaining cryptocurrencies when notified by authorities. While involved in such situations, the service providers are exempt from confidentiality obligations and liability.

The Legislative Yuan has also banned ads, which might be connected to frauds. This comes at a time when crypto crimes using fraudulent schemes are prevalent. Such incidents use platforms like X (formerly Twitter) and Instagram to trap users and steal their cryptocurrencies.

As reported earlier, leading telecom services provider Taiwan Mobile recently bought a cryptocurrency exchange and became the second firm to be licensed as a virtual asset service provider in Taiwan.