Taiwan has introduced tougher AML measures for crypto service providers.

Taiwan wants to improve its anti-money laundering (AML) regulations to prevent fraud and AML measures for virtual asset service providers (VASPs).

Taiwan's Ministry of Justice has proposed amendments to existing AML laws, which could result in up to two years in prison for illegal organizations and fines of up to $1.5 million. The proposed amendments will be sent to Taiwan's National Parliament, the Legislative Yuan, for review.

The “New Four Laws to Combat Fraud” was proposed by Taiwan's Executive Yuan. The amendments are aimed at strengthening the campaign against fraud and anti-money laundering measures for stricter control of crypto service providers.

The four major components of the revised regulations are the Fraud Damage Prevention Regulations, the Anti-Money Laundering Act, the Technology Investigation and Security Act and the Communications Security and Supervision Act.

The most notable change comes in the new Money Laundering Prevention Act, which targets virtual asset service providers. VASPs who break the law face severe penalties for not complying with the law.

Three separate amendments have been made to the Act requiring revised registration requirements and restrictions for domestic and international currency dealers.

Under the newly amended rules, VASPs face jail terms if they provide services without registering with the relevant authority.

A new legal category has also been introduced for money laundering offenses related to third-party payment accounts and virtual property accounts.

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Penalties for using third-party accounts for money laundering can include six months to five years in prison and a fine of up to 50 million New Taiwan dollars ($1.5 million).

Taiwan's Deputy Minister of Justice Huang Mu-hsin said that according to the current regulations, the authorities can impose administrative penalties on cryptocurrency companies that do not comply. But the new proposed law would punish such behavior with hefty fines and jail time.

The proposed law would expose foreign exchange platforms to criminal penalties unless they set up local companies and require AML registration.

The latest proposal comes just months after the country's securities regulator said it would introduce new rules for digital assets in September.