FSC New Anti-Fraud Regulations: Banks and VASPs to Share Information, Virtual Assets Can Be Liquidated and Returned to Victims

Author: Max, Crypto City Cross-industry inquiry mechanism officially launches, banks and VASPs begin sharing suspicious transaction information The FSC issued an announcement yesterday amending the "Regulations Governing Anti-Fraud Crime Compliance Matters for Financial Institutions and Enterprises or Personnel Providing Virtual Asset Services," revising 52 articles and adding 3 new articles in one go, further strengthening the cross-industry cooperation mechanism among banks, electronic payment institutions, and Virtual Asset Service Providers (VASPs). One of the core elements of this amendment is the establishment of a cross-industry inquiry system. In the future, financial institutions and VASPs may legally conduct information inquiries regarding specific accounts, transaction records, and abnormal behaviors, and both parties must provide necessary data to help determine whether fraud, money laundering, or illegal fund transfers are involved. The FSC hopes that through institutionalized data exchange, the time required to identify suspicious transactions can be shortened, allowing financial institutions to more quickly freeze, restrict, or apply risk controls. In the past, banks could only track fiat fund flows, while exchanges could only see on-chain coin flows, leaving a long-standing information gap between the two sides. Fraud syndicates have extensively exploited this gap, rapidly transferring victims' funds into virtual assets and then moving them through cross-border addresses, increasing the difficulty of tracing. This amendment effectively bridges the regulatory gap between fiat fund flows and coin flows, and for the first time fully incorporates VASPs into Taiwan's financial anti-fraud joint defense system. Anti-fraud platforms and cross-industry joint defense upgrade simultaneously, virtual assets formally incorporated into the core of financial regulation In addition to cross-industry inquiries, the FSC has also simultaneously refined the regulations for cross-institutional anti-fraud crime prevention platforms. In the future, institutions establishing such platforms must apply to the FSC and clearly define the scope of customer information that participating institutions may collect, process, and use, aiming to strike a balance between personal data protection and anti-fraud needs. Currently, the relevant platforms are mainly built with the participation of the Financial Information Service Co. and the Joint Credit Information Center. In the future, banks, electronic payment institutions, and VASPs may all become joint defense nodes. Another key focus is deepening the cross-industry joint defense mechanism. The new system requires deposit-taking institutions, electronic payment institutions, and VASPs to establish joint defense reporting processes, with the goal of blocking the rapid flow of fraudulent funds between fiat and virtual assets. In numerous fraud cases in recent years, funds no longer remain in bank accounts but are quickly converted into stablecoins such as $USDT, then flow to overseas on-chain addresses. If regulators only monitor the banking side, they can no longer fully grasp the flow of funds. This also signifies that authorities are beginning to formally view virtual assets as part of the financial infrastructure, rather than as a standalone technology industry. Remaining virtual assets may be legally liquidated, victim restitution system undergoes major adjustment Another important change in this amendment is the addition of a residual virtual asset restitution mechanism. In many past fraud cases, victims' funds had already been converted into virtual assets, but some victims themselves did not have exchange accounts nor the ability to receive cryptocurrencies, often causing restitution procedures to stall. Furthermore, the dramatic price volatility of virtual assets has also led to disputes over the calculation of restitution amounts. To address these practical issues, the FSC has now explicitly stipulated that VASPs may legally liquidate the remaining assets in flagged virtual asset accounts and return them to victims in fiat currency. The regulator hopes this will reduce price volatility risk while accelerating subsequent restitution procedures. This system is also beginning to shift the role of VASPs. In the future, in addition to providing trading services, exchanges must also assume greater responsibilities for judicial cooperation, asset preservation, and risk management. The positioning of cryptocurrency platforms is gradually moving closer to that of financial institutions. Cooperation between banks and crypto platforms still faces challenges; privacy, technical, and accountability issues remain to be resolved Although the FSC has begun promoting cross-sector joint defense, considerable real-world challenges still exist between banks and VASPs. As early as 2025, Crypto City reported that the FSC had planned to incorporate VASPs into the anti-fraud inquiry mechanism, hoping to integrate bank fund flow and exchange coin flow information to more effectively track suspicious transactions. At that time, many cryptocurrency platform operators frankly admitted that they were willing to help combat fraud, but lacked clear legal authorization and real-time response tools, often facing situations where they "could see anomalies but couldn't act on them in real time." The banking side faces equal pressure. Issues including how to identify normal on-chain transactions, how to assess crypto asset risks, and how to strike a balance between information sharing and personal data protection have all become practical challenges. Additionally, VASPs vary greatly in technical capabilities, internal control standards, and resource scale, which may also affect the efficiency of joint defense. However, judging from the direction of this amendment, the authorities have clearly set the tone: in the future, cryptocurrency platforms will no longer be merely trading markets, but must formally join Taiwan's financial anti-fraud and anti-money laundering system as important nodes. (The above content is excerpted and reprinted with authorization from partner Crypto City. Original article link)