Three virtual currency operators violated the AML regulations, and the Financial Supervisory Commission imposed heavy fines exceeding 3 million TWD.

The latest announcement from the Financial Supervisory Commission's Securities and Futures Bureau states that three virtual currency operators have been fined a total of over 3 million New Taiwan Dollars due to improper money laundering prevention operations, highlighting the regulatory authority's high attention to the prevention of money laundering and terrorist financing.

The Securities and Futures Bureau pointed out that He Asia Digital Technology, Chain Science Co., Ltd., and Tuo Huang Digital Technology will be subject to the Anti-Money Laundering and Counter-Terrorism Financing Project inspection by the Financial Supervisory Commission from November to December 2024, and deficiencies were found in all three companies, resulting in fines being imposed on each. The following are the details of each case:

Hea Digital Technology fined 1.5 million.

The Financial Supervisory Commission pointed out that, based on Articles 5, 8, and 13 of the Money Laundering Prevention Act, a fine of NT$1.5 million was imposed on Heya Digital Technology Co., Ltd. (hereinafter referred to as "Heya Company").

(1) Regarding the internal control system and risk assessment, there are circumstances where for non-high-risk natural person clients, the purpose and nature of establishing a business relationship have not been understood, and the risk assessment operations for clients whose actual beneficiaries are current important political figures in foreign governments have not reached the high-risk client threshold according to the established review form. (2) There are circumstances where customer risk assessments have not been implemented, enhanced customer reviews for high-risk clients and regular review operations have not been carried out, and accounts for warning customers have not been settled and closed according to regulations. (3) Regarding the continuous monitoring of transactions, there are cases where the bank has reported customers involved in fraud and has frozen trust accounts, but there has been no assessment to report the suspected money laundering transaction (STR), and investigations have not been properly conducted for transactions triggering suspicious transaction alerts. (4) Regarding the preservation of records, there are circumstances where the evaluation records of name verification operations have not been properly retained.

Chain Technology Company fined 1.02 million dollars

Chain Technology Co., Ltd. (hereinafter referred to as "Chain Technology Company") is fined NT$1,020,000 based on the relevant provisions of the Anti-Money Laundering Act and the Personal Data Protection Act.

(1) There are omissions in the investigation and assessment of whether to report suspected Money Laundering or terrorism financing transactions. (2) Customer review measures have not conducted enhanced reviews for high-risk customers or verified the source of wealth and funds to retain supporting documentation before approving account openings. (3) There is a lack of re-confirmation of customer identity for customers reported to be involved in fraud by banks during ongoing transaction monitoring. (4) Additionally, customer personal data is retained in external company systems without appropriate security measures.

Pioneering Digital Fined 500,000 Yuan

Pioneer Digital Technology Co., Ltd. (hereinafter referred to as "Pioneer Digital Company") was imposed a fine of NT$500,000 for failing to properly execute customer due diligence.

(1) There are omissions in the investigation and assessment of whether to report transactions suspected of Money Laundering or terrorism financing. (2) The customer review measures have not strengthened the review for high-risk customers or verified the source of wealth and funds to retain supporting documents before approving account opening. (3) There is a lack of continuous monitoring of transactions for customers reported by banks as involved in fraud, and their identities have not been re-verified. (4) Additionally, there are cases where customer personal data is retained in external company systems without appropriate security measures.

Case Review: From the First Fine to Industry Giants, VASP Money Laundering Prevention Enters the Era of Heavy Penalties

The recent penalties imposed on three technology companies are not an isolated case. Looking back at the Financial Supervisory Commission's regulatory dynamics regarding Virtual Asset Service Providers (VASP) in Taiwan, the implementation of penalties has become the norm and is gradually tightening.

First Fine: The Online Coin Exchange Unveils Its Beginning

In July 2024, Taiwan's Financial Supervisory Commission (FSC) imposed its first fine on a VASP, marking the beginning of enforcement with the exchange operated by Ace Digital Innovation Co., Ltd. (ACE ). The company was fined NT$1.52 million for failing to implement KYC, not verifying the source of customer wealth, not reporting suspected Money Laundering transactions, and having inadequate internal control mechanisms, making it the first case of a fine for anti-money laundering violations in Taiwan's virtual asset sector.

This fine symbolizes the formal implementation of regulatory compliance standards for the virtual asset industry by the supervisory authority and marks the beginning of a series of inspections and penalties for VASPs. Next, the suspended coin exchange (Rybit) was fined 1.02 million TWD for violating Money Laundering prevention and personal data protection regulations.

The industry leaders have not escaped: MaiCoin and BitOasis faced heavy penalties.

In November 2024, two major exchanges in Taiwan, MaiCoin Group ( Modern Wealth Technology Co., Ltd. ) and Bito ( of the Bito Group, were each fined 1.5 million New Taiwan Dollars. The Financial Supervisory Commission imposed the fines based on Articles 5, 7, 8, and 10 of the Anti-Money Laundering Act.

The Taiwan Financial Supervisory Commission has clearly stated that it will continue to strengthen the anti-money laundering supervision of Virtual Asset Service Providers (VASP), and the frequency of inspections and the severity of penalties may further increase in the future.

This article discusses that three virtual currency operators violated the Money Laundering Prevention Act, and the Financial Supervisory Commission imposed a heavy fine of over 3 million TWD, first reported by Chain News ABMedia.