If new legislation passes, it will mean that all NFT marketplaces will have to assess the risk of illicit finance flowing through their systems and carry out identity checks on new customers and suspicious transactions.
July 29th, 2022
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Members of the European Parliament have proposed a series of amendments that suggest NFT trading platforms should now be made subject to European Union anti-money laundering (AML) laws.
On top of this, lawmakers from the Green Party and Socialist representatives also appear to favor including self-managed crypto wallets and decentralized finance under a proposed regulation on money laundering.
At the end of June 2022, the EU provisionally agreed on new laws known as the Markets in Crypto Assets Regulation (MiCA). Now, an amendment to those laws proposed by the Green Party’s Ernest Urtasun and Kira Marie Peter-Hansen, alongside Socialists Aurore Lalucq and Csaba Molnár, seeks to make NFT platforms ‘obliged entities’.
If the amendment passes, it will mean that all NFT marketplaces will have to assess the risk of illicit finance flowing through their systems and carry out identity checks on new customers and suspicious transactions. This means that NFT marketplaces will have to follow the same regulations as banks, real estate agents, art traders, and other crypto providers.
In addition, further amendments also seek to use the law to impose laundering checks on decentralized autonomous organizations and ‘unhosted wallets’ that aren’t managed by any regulated crypto provider. This is a move that has previously been largely abandoned following opposition from EU member governments.
However, another change to MiCA proposed by Gunnar Beck of the right-wing Alternative for Germany party, seeks to protect cryptocurrencies from the effects of the law, saying cryptos “make it possible for people to diversify their portfolio and protect themselves from risks of [European Central Bank]-induced euro inflation.”
Of course, these amendments still need to be voted on. This means that MiCA will remain unchanged if the proposed amendments cannot garner enough votes.
Across the world, the regulations regarding AML and KYC are constantly changing and evolving, as this news from the EU shows.
If you want to ensure that your business is compliant with ever-evolving AML and KYC regulation, then enlist the help of our AML and KYC compliance solution. As well as helping you verify the identity of your customers, this software also screens them against global PEP and sanctions watchlists, checks for adverse information and media, and provides ongoing monitoring.
To discover how we can help your business, speak to our AML and KYC compliance experts today.
At present, financial institutions such as banks are required to investigate their clients and their sources of wealth or funds. But, until now, many other financial gatekeepers have been exempted from so-called ‘due diligence rules’.
By introducing the so-called ‘travel rule’, the EU aims to ensure financial transparency on exchanges involving crypto assets. The rule will also provide the EU with a framework that will comply with recommendations 15 and 16 of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.
A survey commissioned by the Financial Action Task Force (FATF) has revealed that only 30% of jurisdictions have passed rules to help prevent the illicit use of cryptocurrencies.