He x.com/USTreasury” target=”_blank” rel=”noopener”>US Department of the Treasury has identified nfts as “highly susceptible to fraud and scams” in its latest risk assessment on illicit financing.
Released on May 29, the report outlines how criminals can use nfts to launder money from illegal activities, highlighting the potential of nfts to facilitate money laundering due to their unique and high-value nature.
This report marks the first detailed examination of nfts by the Treasury in the context of financial crime.
<img decoding="async" class="aligncenter wp-image-72322 size-full lazyload" src="https://nftplazas.com/wp-content/uploads/2024/06/illicit-finance-risk-assessment-of-nfts.png” alt=”nft illicit financing risk assessment” width=”800″ height=”500″/>
US Treasury recommends stricter regulations
“The report finds that nfts can be used by illicit actors to launder the proceeds of predicate crimes, often in combination with other methods to obfuscate the illicit source of the proceeds of crime,” Treasury said.
The Treasury also noted that many nft platforms do not have adequate controls to prevent money laundering and sanctions evasion and recommends that stricter regulations be applied to nfts and the platforms that trade them to mitigate these risks.
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. The Treasury's current assessment, however, focuses on financial vulnerabilities.
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