The US Treasury Department has identified NFTs as “highly susceptible to fraud and scams” in its latest risk assessment of illicit finance.
The report, released on May 29, outlines how NFTs can be used by criminals to launder funds from illegal activities, highlighting the potential for NFTs to facilitate money laundering due to their unique and high-value nature.
This report marks the Treasury Department’s first detailed examination of NFTs in the context of financial crime.
The US Treasury Department recommends stricter regulations
“The report finds that illicit actors can use NFTs to launder the proceeds of predicate crimes, often in combination with other methods to obscure the illicit source of crime proceeds,” the Treasury Department said.
The Treasury Department also noted that many NFT platforms do not have adequate controls in place to prevent money laundering and sanctions evasion, and recommends that stricter regulations be applied to NFTs and the platforms that trade them to address these risks to limit.
This assessment contrasts with a US government study from March, which found that no new legislation was needed to address copyright and trademark issues in the NFT space. However, the current assessment by the Ministry of Finance focuses on financial vulnerabilities.
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