US Treasury says NFTs ‘highly susceptible’ to fraud and scams, calls for platform controls to fight money laundering
- NFTs and NFT platforms can potentially be used to launder proceeds from crimes, according to the Treasury’s assessment
- Some NFT firms and platforms do not have the right controls to counter money laundering, terrorist financing and sanctions evasion, the report says
While NFTs and NFT platforms have so far rarely been used for acts like terrorist financing, they can be used to launder proceeds from crimes, said the report by the US Treasury Department.
“This risk assessment demonstrates Treasury’s commitment to analyse illicit finance risks of newer technologies and communicating them to industry and law enforcement,” said Brian Nelson, Treasury undersecretary for terrorism and financial intelligence.
NFTs, which became popular in 2021, are digital works that cannot be replaced or modified and are therefore unique.
Each has a digital certificate of authenticity which in theory cannot be tampered with – it is registered in a blockchain, like cryptocurrencies.
But “cybersecurity vulnerabilities, challenges related to copyright and trademark protections, and hype and fluctuating pricing of NFTs can enable criminals to perpetrate fraud and theft”, said the Treasury report.
