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Binance Seeks AML Compliance in Taiwan Amid Exits from European Markets



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Binance is applying to become compliant with Taiwan's anti-money laundering (AML) rules; a local media reported this week citing sources familiar with the developments. The leading crypto exchange intends to register under the East Asian country's Money Laundering Control Act, per the sources who followed proceedings of a closed-door meeting held on Tuesday with the Taiwan Financial Supervisory Commission (FSC).

The financial markets regulator reportedly informed attendees, including representatives for crypto service providers serving locals, that Binance is securing registration in line with the AML guidelines. The FSC effected its AML laws applying to all virtual assets services providers (VASPs) in July 2021, with the guidance representing the sole regulated aspect of its crypto industry to date.

Worth noting, Binance has been expanding in Asia while simultaneously abandoning most of its European markets either through voluntary withdrawals or rejections from regulators. The exchange unveiled its Japan-serving unit, Binance Japan, at the start of August. Binance Japan obtained licensing from the Japan Financial Services Agency through its acquisition of Sakura Exchange BitCoin for an undisclosed amount last November.

Digital assets guidance in Taiwan

The FSC previously informed the public on March 30 that it was looking to establish a framework for crypto trading and payments for VASPs with a timeline of publishing the guidelines before October. Local industry experts noted that the commission would likely adopt the same strict approach regulating traditional financial institutions to overseeing digital asset platforms. Such an approach would require VASPs to maintain separate reserves for their crypto assets and those from their clients.

The rules would also likely mandate annual audits of these asset reserves by accounting firms which could be a huge bummer for most crypto companies as accounting firms have shown reluctance to take on crypto clients.

In April, a group of Taiwanese lawmakers presented an amendment to establish a crypto regulatory division within the FSC to further rein in the crypto industry. Local news outlet Economic Daily reported on April 26 that the new unit would, in particular, deal with crypto-related issues separate from those addressed by the currently existing four bureaus in charge of banking, securities and futures, insurance and auditing.

News outlet separately Forkast reported in July 2022 that the FSC had asked banks and credit card agencies not to support credit cards as a payment means for virtual assets services. The commission explicitly notified its local banking industry not to take on VASPs as merchants while giving card acquirers a three-month window to comply.

MICA alignment preparations in EU

Meanwhile in Europe, France's securities regulator, the Autorité des Marchés Financiers (AMF), amended its existing crypto licensing regime to align with a broader pan-European framework based on Markets in Crypto-Assets (MiCA) which was approved in April. Under MiCA, crypto companies only need regulatory approval in one EU nation to serve all 27 in the single market.

Still, approval of crypto firms in some jurisdictions like France and Germany might need going through additional hoops due to the strict registration requirements in place. In contrast, other EU member states like Italy and Spain have hardly considered more guidelines beyond the minimum requirements stipulated by the EU’s anti-money laundering directive AMLD5.

France's enhanced registration framework for DASPs

The provisions of General Regulation and updated digital asset service providers (DASPs) policy announced by the AMF on Thursday will take effect starting Jan 2024 ahead of the second and third levels of MiCA coming into play later in 2024 and 2025. DASPs looking to set up full custodial, exchange, and crypto trading operations in the country will be required to comply with the ‘enhanced' requirements.

They will also be obligated to institute “security and internal control systems, systems for managing conflicts of interest” and disclose “accurate and non-misleading information, public pricing policies.” Thus far, only one firm, SG-Forge, has been licensed to provide all crypto services recognized by the principal financial authority (AMF), which serves as the stock market regulator in France. Though Binance is registered with the French regulator, it is yet to secure licensing which represents the highest form of regulatory certification.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.