Digital Art Such as NFTs Could be Used for Money Laundering, U.S. Treasury Reports
The U.S. Department of the Treasury is cautious about non-fungible tokens (NFT) and warns of that its market might become a tool for money laundering.
In a 40-page report published on Friday, in accordance with the Anti-Money Laundering Act of 2020, suggesting that high-value art is involved in money laundering, it is said that NFTs could be involved in illicit transactions in the art market.
A press release stated:
“The emerging digital art market, such as the use of non-fungible tokens (NFT), may present new risks, depending on the structure and market incentives.”
According to the report, art is generally easy to transport and the community upholds a “long-standing culture of privacy” and is therefore vulnerable to money laundering.
The study points that the NFT and digital art sector has matured after its significant growth, with traditional auction houses including the new art and should be considered similar to the non-digital, traditional art.
“Recent sales of high-profile pieces of physical and digital art involving NFTs, including NFT-authenticated works such as Beeple’s ‘Everydays: The First 5000 Days,’ which sold at a Christie’s auction for more than $69 million, indicate that this nascent art sector has reached similar valuations as traditional art mediums.”
The authors also warn of possible wash trading with NFTs.
“Furthermore, NFTs can be used to conduct self-laundering, where criminals may purchase an NFT with illicit funds and proceed to transact with themselves to create records of sales on the blockchain. The NFT could then be sold to an unwitting individual who would compensate the criminal with clean funds not tied to a prior crime.”
Popular NFT marketplaces such Dapper Labs, OpenSea and SuperRare, should be subject to existing know-your-customer (KYC) and anti-money laundering (AML) laws, the report concludes.
The post Digital Art Such as NFTs Could be Used for Money Laundering, U.S. Treasury Reports appeared first on iGaming.org.
Source: igaming
