What measures should NFT companies or NFTs put in place to become AML compliant? And is it worth the trouble?
As legislators sharpen their pencils, NFT marketplaces and businesses are bound to be met with AML compliance requirements and the need to build AML infrastructure.
However, they shouldn’t do it blindly. There questions that every NFT business should consider answering while working their way into AML compliance:
Despite the crypto universe’s love for decentralization, a centralized marketplace can effectively become a legal entity.
By becoming a legal entity, NFT marketplaces make it easier to both earn user trust and attract investors.
While not operating as one, however, they can avoid compliance which is why when/if picking an AML regime, these businesses should seriously ponder over the next point.
How Will NFT Sales Deal with Different Jurisdictions?
When establishing a marketplace or any other related business, we cannot emphasize enough just how important the jurisdiction is.
This can single handedly destroy one’s strategy has regulations and taxes can greatly vary and really stifle growth.
In fact, jurisdiction will matter in 2 incredibly important issues:
NFT Marketplaces and KYC data
Some jurisdictions in Europe, for example, will require onboarding processes to include video KYC, something which leads to greater attrition in the process as a whole and can certainly take its toll on any company’s conversion rates.
The most obviously easy way of addressing any KYC issue is having a reliable KYC provider rather than building everything from the ground up. KYC providers often have KYC+AML processes together with payment providers, so it might be fruitful to pursue those avenues.
Marketplaces and regulation
Some countries deal with NFTs in a restrictive manner and knowing how to position an NFT company in order to not fall into the pitfalls of investment regulations becomes key.
Europe, for example, has MiFIR and MiFID, while the US has the Truth in Securities Act (Securities Act of 1933) in place. This is the reason why many NFT marketplaces are often positioned as art dealers and not brokers (regardless of NFTs speculative nature).
What AML Measures Should NFT Businesses Have?
Other than defining its risk-based approach, there are at least 2 other very important parameters NFT businesses should look into:
· AML team and AML training: an AML compliance officer is to be appointed as AML training should be given to employees….
