The Financial Supervisory Commission imposes a heavy fine of 7.02 million! Six exchanges completely fail KYC, violating the Anti-Money Laundering Act

Taiwan’s Financial Supervisory Commission (FSC) Securities and Futures Bureau issued NT$7.02 million in fines at once on November 17 to six Virtual Asset Service Providers (VASPs), all for lax anti-money laundering (AML) practices. All six companies on the penalty list—Asia Pacific eAn Technology (eAnNet), Quan Shi International, Cross Chain Technology, Taiwan Zhijing, Coin Era, and Sunfest—were fined for violating the Money Laundering Control Act. The fines ranged from NT$400,000 to NT$2 million, with Asia Pacific eAnNet receiving the highest penalty.

FSC Identified Three Major Violations in May Inspection

The FSC announced the penalty results for VASPs, stating that these companies were fined a total of NT$7.02 million for failing to fulfill AML obligations. The regulator completed a special inspection in May 2025, conducting a comprehensive review of VASPs registered in Taiwan, and published the penalty results six months later on November 17. This six-month investigation and review period demonstrates the FSC’s cautious approach, with every violation detail carefully scrutinized and legally evaluated.

The violations were mainly concentrated in three key areas: failure to implement customer identification (KYC), lack of transaction monitoring, and insufficient suspicious transaction reporting. These three areas form the core pillars of AML operations; any lapse could turn a trading platform into a money laundering channel.

What is KYC? Know Your Customer (KYC) is a basic procedure that financial institutions must perform, requiring operators to verify the true identity of their customers, understand their source of funds, and trading purpose before account opening or transactions. In the virtual currency sector, KYC includes requiring users to provide ID, proof of address, selfies, etc., and using third-party systems for identity verification. The penalized companies evidently failed in this fundamental aspect, possibly allowing account openings without verification, conducting overly lax verification processes, or neglecting regular updates of customer information.

Lack of transaction monitoring was the second major violation. The Money Laundering Control Act requires VASPs to establish automated transaction monitoring systems to identify and flag abnormal transaction patterns. For example, large transfers in and out within a short time, frequent small-value split transactions, or frequent dealings with high-risk regions should all trigger alarms. Penalized companies may have lacked such monitoring systems, or their systems were not functioning effectively.

Insufficient suspicious transaction reporting was the third key issue. Even when suspicious transactions are detected, operators must report them to the Ministry of Justice’s Anti-Money Laundering Center within the required timeframe. These companies may have failed to report due to weak awareness, incomplete internal procedures, or fear of losing customers, in violation of the mandatory requirements of the Money Laundering Control Act.

Observers believe this hefty fine signals the authorities’ zero tolerance for basic compliance lapses on crypto platforms. While NT$7.02 million may not be astronomical in traditional finance, it is a significant burden for most small-scale virtual currency exchanges. More importantly, this penalty sends a clear message: the FSC will no longer tolerate crypto platforms operating in regulatory gray areas.

eAnNet Fined Most; 5 Companies Have Exited the Market

(Source: BlockTempo)

The fines ranged from NT$400,000 to NT$2 million, with Asia Pacific eAnNet receiving the highest fine. Most companies were already listed as “prohibited from providing services” during the investigation period. Asia Pacific eAnNet, also known as eAnNet, was a once-active exchange fined NT$2 million, indicating the most severe violations. The case may involve systemic compliance failures rather than isolated lapses.

Of the six penalized companies, five exited “virtual asset services” in September this year, including Asia Pacific eAnNet Technology, Quan Shi International, Taiwan Zhijing, Coin Era Technology, and Sunfest—all have ceased operations as service providers. This is an astonishing proportion: 83% of the penalized companies chose to exit, showing that the deterrent effect of these penalties far outweighs the fines themselves.

Reasons for these exits may be multifaceted. First, the high fines increased operating costs, which may be unbearable for small platforms with limited profitability. Second, public penalties severely damage brand reputation, causing user trust to plummet and trading volumes to drop sharply. Third, the FSC’s stringent regulatory requirements mean operators must invest heavily in building robust compliance systems, including hiring professional compliance staff, purchasing monitoring software, establishing internal audit mechanisms, etc.—costs likely beyond small operators’ capacity.

The only company that has not exited is Cross Chain Technology, which may have chosen to pay the fine and undergo a comprehensive overhaul to continue operating within the regulatory framework. Such a choice requires strong financial capability and a long-term commitment to the Taiwan market. From another perspective, the mass exit of operators means Taiwan’s virtual currency market is undergoing a shakeout, with compliant, well-capitalized players set to gain greater market share.

It is also noteworthy that most companies were already placed on the “prohibited from providing services” list during the investigation period. This shows that the FSC takes immediate preventive action upon discovering major violations, rather than waiting for the penalty process to conclude. This “suspend first, then penalize” approach protects investors from ongoing money laundering risks, but also delivers a harsher blow to operators.

Taiwan’s Regulatory Context: Evolution from Registration to Heavy Penalties

Taiwan’s regulation of virtual assets dates back to July 1, 2021, when VASPs were first brought under supervision—marking the beginning of crypto regulation in Taiwan. At that time, the FSC announced that VASPs would fall under the Money Laundering Control Act, requiring all companies engaged in virtual currency trading, exchange, or wallet services to register with the FSC and comply with AML regulations.

The Money Laundering Control Act was amended again in July 2024, increasing penalties and requiring foreign operators to establish a local entity. This amendment marked a significant upgrade in Taiwan’s regulatory framework, with penalty caps increased from tens of thousands to millions or even tens of millions of NT dollars. In addition, the amendment explicitly requires foreign operators serving Taiwanese users to establish branches or subsidiaries in Taiwan—instead of offering services solely through websites.

The FSC has set September 2025 as the final registration deadline. Companies that are overdue but still operating will face administrative penalties or even criminal liability. With this deadline approaching, unregistered virtual currency operators must make a decision in the coming months: either complete registration and establish a full compliance system or exit the Taiwan market. Continuing to operate without a license will result in even harsher penalties and possible criminal charges.

This NT$7.02 million penalty serves as a wake-up call for the entire industry. By publicly penalizing VASPs, the FSC sends a clear message: AML compliance is not optional—it is the baseline, and violators will pay a heavy price. For crypto exchanges still operating in Taiwan, this penalty is a stern warning to immediately review their KYC procedures, transaction monitoring systems, and suspicious transaction reporting mechanisms.

Three Stages of VASP Regulation in Taiwan

July 2021—Regulation Begins: VASPs are first brought under the Money Laundering Control Act, required to register

July 2024—Penalties Upgraded: Act amended, penalty caps increased, foreign operators required to establish a local entity

September 2025—Final Deadline: Unregistered companies face administrative penalties or even criminal charges; the market enters a full compliance era

From a broader perspective, this penalty reflects global regulatory trends. As the virtual currency market grows, regulators worldwide are strengthening controls on money laundering risks. Taiwan’s FSC approach aligns with the EU’s MiCA, the US FinCEN, and other major regulators—emphasizing that operators must bear the same AML responsibilities as traditional financial institutions.