The Banking Association recently passed a key amendment aimed at strengthening the cooperation regulations between banks and virtual currency trading platforms, while enhancing transaction security and convenience. It is seen as a major step against illegal activities such as money laundering.
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Banking Association Amendment: User accounts have more flexibility and responsibility in monitoring exchange customers
Open users can use accounts with the same name but different banks
Strict monitoring of funds flow required by exchanges
New roles and responsibilities for banks in the virtual currency industry
Strict scrutiny of exchange user identification verification and compliance
Anti-money laundering requirements for opening accounts in overseas exchanges
In the past, the regulations of the Banking Association required operators and users of virtual currency trading platforms to use accounts from the same bank for transactions, in order to facilitate the control of funds flow. However, this requirement has caused a lot of trouble in practice. Therefore, the new amendment allows operators and users to use accounts from different banks for transactions, as long as the account name matches the user’s name. This change not only increases transaction convenience but also reduces operational difficulties.
To further prevent illegal activities such as money laundering, the new amendment requires platform operators to strictly monitor the flow of funds. Any funds involved in virtual currency transactions must be transferred from deposit accounts with the same name as the user. This provision effectively avoids the transfer of funds to other accounts, thereby reducing the risk of money laundering.
The amendment also emphasizes the role and responsibility of banks in providing fund custody services. Banks need to ensure that the fund custody services they provide are based on trust or in the form of complete performance guarantees. In addition, banks should assess the business scope of platform operators and adopt corresponding internal control mechanisms based on the level of risk.
The new regulations also include identity verification requirements for Virtual Asset Service Providers (VASPs) and trading businesses. Platform operators must confirm whether they comply with anti-money laundering laws and regulations, especially for overseas customers. They need to verify the registration or approval status of these customers in relevant countries to ensure their legitimacy and transparency.
The Banking Association stated that if a customer is an overseas customer, the bank must ascertain the anti-money laundering or business supervisory authorities established or operated in the country where the customer is located, such as the Financial Crimes Enforcement Network (FinCEN) in the United States or the Financial Services Agency (FSA) in Japan, to determine whether they are registered, registered, or approved platform operators.
(Regarding the reminder of exchanges promoting MSB qualifications) Many overseas exchanges will report MSB to the United States, but registering as an MSB does not mean that they have obtained supervision endorsement from FinCEN; it is only for the purpose of registration with the government. The MSB license itself or other factors do not provide protection to overseas investors in the United States. It can only serve as a basis for the company to comply with anti-money laundering and anti-terrorism financing regulations. Whether investors in encrypted products can be protected still depends on whether the company is regulated and supervised in the jurisdiction where the users are located. If the business involves derivatives (such as contracts, futures, and options), it is also not within the scope of MSB supervision.
Exchanges
Taiwan
Banking Association
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