Do AML regulations apply to NFTs?
Select jurisdiction
Netherlands
AML regulations apply to NFTs if the services involved are regulated under the Dutch
implementation of the Fifth Anti Money Laundering Directive (“AMLD5”): Regulation for the
prevention of money laundering and terrorist financing (Wet ter voorkoming van witwassen en
financieren van terrorisme, the “Wwft”).
NFTs will be regarded as a virtual currency under the Wwft. Art. 1(1)(b) Wwft defines ‘virtual
currency’ as “a digital representation of value that is not issued or guaranteed by a central bank
or a public authority, is not necessarily attached to a legally established currency and does not
possess a legal status of currency or money, but is accepted by natural or legal persons as a
means of exchange and which can be transferred, stored and traded electronically”.
Art. 23b Wwft stipulates a registration obligation with the Dutch Central Bank (De
Nederlandsche Bank or “DNB”) for crypto service providers that provide these services in a
professional capacity or on a commercial basis in or from the Netherlands. Crypto service
providers are (i) providers of services for the exchange between virtual and regular currencies
and (ii) custodian wallet providers. A provider offers exchange services when it effects
transactions or enables customers to effect transactions in which virtual currencies are
exchanged for regular currencies or vice versa (not defined under the Wwft). A custodian wallet
provider is defined as “an entity that provides services to safeguard private cryptographic keys
on behalf of its customers, to hold, store and transfer virtual currencies” (art. 1(1)(a) Wwft).
India
Yes, AML regulations/standards as issued by the Reserve Bank of India will apply to NFTs. AML regulations are designed to prevent the use of financial systems for money laundering and other illicit activities, and they can apply to various types of transactions, including those involving NFTs. Because NFTs are often used to represent ownership of digital assets, they can be subject to AML regulations if they are used in a way that is considered to be high-risk for money laundering or other illicit activities. It is important for businesses and individuals involved with NFTs to understand and comply with applicable AML regulations in order to avoid potential legal and financial consequences.
Kenya
Kenya applies FATF recommended standards of regulation in AML enforcement. The Proceeds
of Crime and Anti-Money Laundering (POCAMLA) Act follows broad FATF recommendations on
transaction monitoring and reporting for financial institutions. The Act also empowers the
Cabinet Minister for Finance to designate industries that may be subject to money laundering
risks , and designate compliance requirements for the same.
Brazil
The main regulation for the Prevention of Money Laundering is the Brazilian Law n.
9613/1998, which deals with money laundering crimes. This legal norm provides a regulatory
basis for AML preventive actions that must be adopted by companies authorized to operate by
the Central Bank. Although it is not mandatory for NFTs that are not security assets, it is a best
practice to comply with these Policies.
Austria
The Financial Markets Anti-Money Laundering Act (Finanzmarkt-Geldwäschegesetz, FM-GwG), which
came into force on 10.01.2020, transposes the Fifth Anti-Money Laundering Directive (AMLD5) and
adopts the definition of virtual currencies of AMLD5, namely describing service providers offering
one or more of the following. In general, NFTs are regarded to be largely outside the definition of
virtual currencies according to the FM-GwG. However, AML requirements also arise under
commercial law for obtaining cash payments of at least EUR 10,000 pursuant to the Austrian Trade
Code (Gewerbeordnung, GewO).
Poland
Yes, if the entity issuing the NFT or in any other way engaged in the NFT’s transaction is an obliged entity pursuant to the AML regulations in force in the Polish law, which are set forth in the Act of 1 March 2018 on Counteracting Money Laundering and Financing of Terrorism.
