NFT platforms must follow EU anti-money laundering rules

The European Union (EU) has been moving forward to regulate the cryptocurrency sector. Its objective is to combat money laundering (AML) and terrorist financing. But now, the bloc’s lawmakers want to expand these new rules to non-fungible tokens (NFTs) as well.

A group of members of the European Parliament proposed an amendment to the AML legislation to include NFT platforms such as the OpenSea for example.

The amendment is part of a larger package of proposals that has been put forward by European lawmakers. This package was called “Prevention of Abuse of the Financial System for Money Laundering or Terrorism”.

NFT companies in the EU’s crosshairs

The proposal on NFTs was presented by four EU members. Two of them are from the Green Party and the other two are socialist representatives. They want the EU to broaden the legislation’s coverage for companies that trade NFTs.

The amendment seeks to include “digital asset service providers, who deal in or act as intermediaries for the import, minting, sale and purchase of unique, non-fungible digital assets that represent ownership of a unique digital or physical asset, including the artwork, real estate, digital collectibles and gaming items and any other value,” per the June 22 provision.

In practice, this may mean that companies, such as the OpenSea NFTs marketplace, have to assess the risk of illicit funding flowing into their system. In addition, these companies may have to verify the identity of their customers, as well as report suspicious transactions.

This is already done by entities such as banks, real estate agents, art dealers and other providers of digital assets.

EU tightens siege on digital assets

The latest development comes shortly after the European Parliament and the Council of the European Union reached an interim agreement to track cryptocurrency transfers.

Proposal foresees that crypto companies will have to verify the identities of their customers to track the assets. The group’s idea is to identify who is behind each of the transactions.

In addition, the new rules provide for the reporting of suspicious transactions by crypto service providers to regulators. This is what Ernest Urtasun, the legislator who helped lead the measure in the EU, said:

“The new rules will allow authorities to link certain transfers to criminal activities and thus identify the real person behind them,” he said.