Classify the token
The virtual-asset definition turns on the token's character as a digital representation of value that can be traded, transferred or used for payment or investment, and on whether it is excluded by the specific provisions. An NFT linked to a unique work may be collectible content; a tokenised financial product or a fractional investment may be something else entirely. Each product line should be classified with reasons.
The classification is not permanent: a project can change its token's utility, add trading features or fractionalise ownership, which can change the analysis. Version the classification and re-test when the product changes.
Map the services around the token
A platform that merely displays listings may not provide the services a marketplace that executes exchanges provides. The activity test is the same as for any VASP: what does the business actually do with the token, the customer and the value?
- Minting and primary issuance
- Marketplace exchange for money or other virtual assets
- Safekeeping or custody of private keys
- Customer transfers
- Offers or sales involving a table 1 financial service
Apply CDD and monitoring where captured
Collectible markets have their own laundering patterns: wash trading to manufacture value, self-purchases, anonymous wallet flips and payments outside the platform. The monitoring program should name the patterns relevant to the product.
- Complete initial CDD before providing a designated service
- Screen customers, beneficial owners and wallet addresses
- Apply the travel rule to transfers of value involving the token where it applies
- Monitor wash trading, self-dealing and round-tripping patterns
- Assess royalties and payment flows for source-of-funds risk
Record the boundaries
The file should be able to answer two questions: why is this token a virtual asset (or not), and why is this service a designated service (or not). A classification record makes the compliance work explainable when the product is new.
- The token classification and the basis for it
- The services provided and the designated services that follow
- The CDD and screening evidence
- The reporting decisions and their reasons
- The review trigger when the product or market changes
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Is every NFT a virtual asset?
No. The analysis depends on the token's characteristics and the service provided. Some NFTs are virtual assets; others are content, licences or excluded products.
Does an NFT marketplace need to register as a VASP?
It depends on the services the marketplace provides and the tokens it handles. A platform that executes exchanges, safekeeps keys or provides other captured services must assess registration and obligations.
Do NFT transfers trigger the travel rule?
Where the transfer involves a virtual asset and meets the travel rule conditions, the obligations apply. The classification of the token comes first.
What records should an NFT business keep?
The token classification, service mapping, CDD and screening evidence, transaction and wallet records, and reporting decisions, retained for the required period.
Put it into practice
Cassandra AML turns these obligations into a working system: designated-service decisions, customer due diligence, screening, monitoring and reporting records — hosted in Sydney, free to start.
This guide is general information for Australian professionals. It is not legal advice and does not replace the AML/CTF Act, the AML/CTF Rules or AUSTRAC guidance. Confirm your specific obligations with AUSTRAC or a qualified legal adviser. See our editorial and correction standards.