In regard to the whole ToS pedantry, a distinction to make would be the following: whether the account that the friend of OP registered was their first or a subsequent account. The former should not raise any issue (we can pick apart semantics if desired) and should be in line with the terms, as confusing as they are. The latter does pose dubiousness but the violation of ToS should not be reflected with an immediate asset seizure. I doubt anyone would see this as morally
or legally just.
Though, NS probably doesn't have a problem with that since they masquerade the rollover requirements as AML precautions.
