NFTs
‘NFTs are vulnerable to criminal use,’ says US Treasury Department risk assessment, citing problems with management systems to combat money laundering
May 30, 2024 20:00:00
On May 30, 2024, the US Treasury Department released its first financial risk assessment report on ‘NFTs (Non-Fungible Tokens).’ The Treasury Department has severely criticized platforms dealing in NFTs for neglecting anti-money laundering measures, etc.
Illicit financial risk assessment of non-fungible tokens – Illicit financial risk assessment of non-fungible tokens.pdf
(PDF file)
US Treasury describes non-fungible tokens as “highly susceptible” to use in financial crimes
https://www.coindesk.com/policy/2024/05/29/us-treasury-describes-nfts-as-highly-susceptible-to-use-in-fraud-and-scams/
US Treasury Department Releases First Financial Risk Assessment Report on NFTs – NFT News Today
https://nftnewstoday.com/2024/05/30/us-treasury-department-releases-first-ever-finance-risk-assessment-report-on-nfts/
In the Treasury Department’s opinion, NFTs are easily used by criminals for money laundering and regulatory evasion, and platforms that handle NFTs are not in a position to adequately manage such crimes. Therefore, the Treasury Department recommended that platforms apply new regulatory measures.
The Ministry of Finance urges citizens to be careful, not only because of the financial issues surrounding NFTs, but also because NFTs themselves are a prime target for criminals.
According to the Ministry of Finance, fraud involving NFTs is rampant and there are also concerns about intellectual property issues such as misrepresentation of rights and violations of copyright and trademark protections.
The Ministry of Finance used the case of North Korea as a case study, explaining how North Korea used NFTs to raise funds for its military, as well as the methods used by related hacker groups to steal digital assets, and appealed to raise awareness of the risks that are emerging.
In 2022, an online game that advertised that it was possible to earn NFTs just by playing games was hacked and it was discovered that over 75 billion yen in virtual currency had been stolen. Subsequent investigations revealed that the mastermind was a North Korean criminal group.
NFT News Today, which covers NFT-related news, wrote: ‘The Treasury Department’s publication of this assessment report marks an important step in understanding and addressing the risks associated with NFTs. Regulatory clarity and consumer protection are essential to navigating the evolving NFT landscape. Ongoing collaboration between stakeholders is essential to ensuring a safe and transparent NFT marketplace. Only through awareness, education and appropriate regulation can the industry protect itself against potential risks and safety concerns.”