US Treasury Department: NFTs are susceptible to use in fraud
In its first-ever NFT Illicit Finance Risk Assessment report, the US Treasury Department investigated how vulnerabilities associated with NFTs and NFT platforms could be used by illegal actors.
In the statement made by the Ministry, it was stated that the risk assessment report discussed how NFTs can be used by illegal actors for money laundering and financing of terrorism and weapons proliferation.
It was stated in the statement that the report revealed that NFTs are extremely suitable for use for fraud and fraud and may be subject to theft, and that it was determined that illegal actors can use NFTs together with other methods to launder the proceeds of crimes.
In the statement, it was pointed out that inadequate cybersecurity protections, difficulties with copyright and trademark protections, and exaggerated and fluctuating prices of NFTs may enable criminals to commit fraud and theft related to NFTs and NFT platforms, and some NFT companies and platforms are also trying to reduce the risks. It was emphasized that it lacked appropriate controls to combat money laundering, terrorist financing and sanctions evasion.
It was stated in the statement that the report also included various actions to address risks, and that suggestions such as increasing awareness about existing obligations in the sector, continuing to implement existing laws and regulations regarding NFTs and NFT platforms, and considering further regulations were listed.
Brian Nelson, US Treasury Department Undersecretary for Terrorism and Financial Intelligence, whose assessments were included in the statement, explained that the risk assessment shows the Department’s determination to analyze the illicit financing risks of new technologies and communicate them to law enforcement.
Nelson called on the private sector to use the findings of this report to determine their own risk mitigation strategies to prevent illicit actors from misusing NFTs and NFT platforms.