NFT might bolster money-laundering schemes, according to a report from a British security think tank

December 4, 2021 - Around 2 mins mins to read

The Royal United Services Institute (RUSI), a British military and security think tank, has raised concerns about the use of NFT assets for money laundering. According to the research, in order to reduce money laundering concerns, a “know your customer” monitoring system “must be adopted.”

A report from a British security think tank warns that NFTs might bolster money-laundering schemes. — *Source: rusi.org*

The Royal United Services Institute for Defence and Security Studies, or RUSI, was formed in 1831 and is the world’s oldest defense and security think tank. RUSI issued a paper on non-fungible token assets on December 2, and the RUSI researchers question if NFTs might contribute to money laundering operations.

“This technology can raise red flags in terms of money laundering and financial criminality,” RUSI cautions. “To begin with, non-fungible token are most often acquired on online marketplaces using cryptocurrencies. Cryptocurrencies are commonly used for harmful purposes, such as concealing the source of illegal gains, and, despite the fact that transactions are traceable, more skilled criminal actors deploy a number of strategies to thwart law enforcement investigations.”

According to the RUSI research “NFTs: A New Frontier for Money Laundering?”

A system of ‘know your customer’ policies and ongoing monitoring, similar to those used in the traditional art market and in compliant cryptocurrency exchanges, needs to be implemented.

For decades, money laundering in the traditional art scene has been a source of contention. According to Graham Bowley, an investigative writer for the New York Times, on June 19, US legislators want to look into the covert art market. “Secrecy has long been a part of the mystique of the art market, but politicians now say they think it breeds abuses and should be addressed,” Bowley wrote.

Researchers at RUSI emphasize that criminal actors can penetrate non-fungible token marketplaces and exploit “novel risks.” “An art theft is also feasible within the NFT domain,” according to the RUSI research. “Criminal actors can hack into NFT marketplace user accounts and transfer NFTs to their own accounts.” The hacker can rapidly sell the stolen token(s) and attempt to launder the funds after transferring the NFTs.”

While RUSI experts believe that money laundering in the non-fungible token art and collectibles industry may be reduced, the paper also states that “NFT forgery and theft can also be reduced.” RUSI advises NFT markets to use two-factor authentication (2FA) systems and maintain “excellent cyber security.” Furthermore, RUSI advises creating a stolen NFT register that “would imitate the Art Loss Register.”

Patrick

Coincu News

NFT

NFT might bolster money-laundering schemes, according to a report from a British security think tank

The Royal United Services Institute (RUSI), a British military and security think tank, has raised concerns about the use of NFT assets for money laundering. According to the research, in order to reduce money laundering concerns, a “know your customer” monitoring system “must be adopted.”

According to the RUSI research “NFTs: A New Frontier for Money Laundering?”

A system of ‘know your customer’ policies and ongoing monitoring, similar to those used in the traditional art market and in compliant cryptocurrency exchanges, needs to be implemented.