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AML/KYC Issues

Like every other blockchain application, NFT networks are generally anonymous. This means that users can easily sell and purchase NFTs across many marketplaces without needing to verify their identities. In fact, many NFT networks thrive on the fact that most NFT creators are anonymous. This situation creates security concerns within the context of money laundering and general financial crimes.

AML (Anti-Money Laundering) refers to a set of protocols that are put in place to prevent money laundering activities within a platform. On the other hand, KYC (Know Your Customer) refers to processes used to verify users’ identities. KYC is often viewed as a sub-set of AML. However, both KYC and AML processes are needed on NFT platforms for several reasons. First, without these processes, NFT users may be unknowingly contributing to criminal activities by transacting with certain network users. Second, it also puts users in danger of scam projects which could lead to a loss of their funds.

To solve this issue, more marketplaces need to integrate their systems with compliant AML/KYC protocols. Users also need to ensure that these protocols determine their marketplace choices. This will ensure that their funds are safe and that they are not used as instruments for fraud.

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