- KYC (Know Your Customer) measures
KYC is mainly used to verify user identity and prevent fraud, money laundering and illegal transactions.
✅ Basic KYC requirements
- Collect basic identity information (name, date of birth, email, address).
- Identity document verification (such as passport, driver’s license or government-issued ID card).
- Face recognition technology (require users to take a selfie and match the ID card photo).
- Address verification (verify the address through water and electricity bills or bank statements).
- Mobile phone and email verification (send a verification code for authentication).
🔹 Which users are suitable?
- Buy or sell NFTs over a certain amount (for example, more than $3,000).
- Frequently trade NFTs (prevent money laundering using NFTs).
- Withdraw or exchange NFT assets for legal currency (may involve financial supervision).
🔹 How to achieve it?
NFT platforms can use third-party KYC providers for identity verification, such as:
- Jumio (AI-driven identity verification)
- Chainalysis KYT (identity monitoring specifically for crypto assets)
- Civic (Web3 KYC solution)
- Sumsub (provides automated KYC process)
2.AML (Anti-Money Laundering) Measures
AML aims to prevent illegal capital flows through NFT transactions.
✅ AML Basic Requirements
- Monitor abnormal transactions (such as the same NFT being repeatedly traded at a high price).
- Set transaction limits (single or daily NFT transaction limits).
- Screen sanctioned lists (prohibit OFAC sanctioned countries or individuals from trading).
- Report suspicious activities (such as large numbers of anonymous transactions, abnormally high-priced NFT transactions).
🔹 How to implement?
NFT platforms can use blockchain analysis tools for AML monitoring, such as:
- Chainalysis (on-chain monitoring of suspicious fund flows)
- Elliptic (detection of cryptocurrency crimes)
- CipherTrace (identification of illegal NFT transactions)
3.KYC & AML implementation process example
🔹 When registering an account (basic KYC)
✅ Collect email, mobile phone number, and verify identity through verification code.
✅ Require users to submit proof of identity (such as passport, driver’s license).
✅ Perform facial recognition to ensure that it matches the ID card.
🔹 When trading NFTs (AML monitoring)
✅ Set high-value transaction alerts (for example, a single NFT transaction exceeds $10,000).
✅ Monitor suspicious transaction patterns (such as NFTs being traded at high prices multiple times in a short period of time).
✅ Automatically compare the OFAC sanctions list and reject transactions by high-risk users.
🔹 When withdrawing to a bank account (Advanced KYC)
✅ Require users to provide bank account information to match KYC information.
✅ Perform additional identity verification (such as SMS verification code or secondary facial recognition).
- Comply with KYC/AML regulations in New York State and the United States
According to the New York State Department of Financial Services (NYDFS) and the United States FinCEN regulations, NFT platforms that involve fiat currency exchange, virtual asset storage or financial transactions may need to comply with the following laws:
✅ Bank Secrecy Act (BSA) – KYC/AML monitoring measures are required
✅ Anti-Money Laundering Act (AML Act) – Prevent illegal capital flows
✅ New York State BitLicense regulations (if NFT transactions involve virtual currency)
Conclusion: How to implement KYC and AML on NFT websites
✅ KYC: Verify user identity (ID card, address, face recognition)
✅ AML: Monitor abnormal NFT transactions to prevent money laundering and fraud
✅ Use third-party services (Jumio, Chainalysis, Civic, etc.) to automate the KYC/AML process
✅ Comply with New York State and US anti-money laundering regulations to prevent legal risks
If your NFT platform involves high-value transactions or fiat currency exchange, it is recommended to consult a professional lawyer to ensure full compliance.