Regulators around the world have issued new warnings on how criminals can use NFTs for money laundering.
Eva Marie Uzcategui / Bloomberg
On Thursday, global regulators issued new warnings about increased risk of money laundering and fraud on digital non-fungible tokens (NFTs). The Co-Chief of Global Tax Enforcement (J5), a consortium of regulatory agencies including the IRS and agencies in Australia, Canada, the Netherlands and the United Kingdom, Joint statement.. “The majority of cryptocurrency owners and people who buy NFTs do so for good reason, but criminals are looking for ways to exploit new technologies. Cryptocurrencies and NFTs are not immune.” press release Attached to the state of the new document.
The J5 Advisory aims to elaborate on the specific warning signs of fraud and money laundering in the NFT market and to provide banks, other businesses and law enforcement agencies with tips for finding fraud. It is said that. Will Day, Head of J5 and Deputy Chief Cabinet Secretary of the Australian Tax Department, said it would be the “first” document issued by J5 to combat tax crime and money laundering on digital assets.
According to the document, one danger signal is a well-established network of parties that send and receive “the same transaction or group of transactions” to and from each other. In other words, tightly linked clusters of digital accounts are trading with each other. Another “strong indicator” is that “NFTs were sold at a high price and reacquired at a small price from the same party or third party.” Yet another signal is when high or low priced NFTs are traded in frequent transactions.
Immediate buying and selling of low-value NFTs can also be a sign of illegal activity. The J5 document also mentions trading the NBA Top Shot, a basketball video NFT that gained popularity last year but has since lost most of its value. “In the NBA’s top shot, many low-value (ie, less than 10K) NFTs were bought on the same day, and the owner holds the position for only a few minutes. This may be a way to wash the money. Hmm.”
Esteban Castaño, Founder and CEO of cryptocurrency analysis firm TRM Labs, said: Forbes In February, concerns about money laundering at NFTs are justified. “We’ve already seen the nation-state move assets to NFTs and put them back, so it’s not a boogeyman-it’s real. It’s happening.” He hacked. People who commit financial crimes, such as ransomware attacks and the sale of stolen credit cards, say they can receive revenue and move to NFTs to hide or wash their funds.
In February, Castaño said the risk of money laundering by NFTs is “small today and likely to grow.” Chainalysis, a New York-based cryptographic analysis company, Estimated Fraudulently acquired funds (for example, fraudulent money) were transferred to NFTs in the fourth quarter of 2021 for a total of $ 1.4 million.
OpenSea, the leading NFT marketplace that drives about $ 3 billion in transactions each month, is currently not verifying customer identities through the “Know your customer” (KYC) checks required by banks and other financial services. An OpenSea spokesperson did not immediately respond to a request for comment. According to February Report From the Treasury, the NFT Marketplace may ultimately need to comply with the KYC and other anti-money laundering obligations.
