US Treasury Warns Over Money Laundering in NFT
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4 February

The US Treasury Department has issued a study saying there is some evidence of money laundering risk in the market of non-fungible tokens (NFTs). According to a press release, the watchdog also identified efforts that government agencies, regulators, could undertake to further mitigate the laundering of illicit proceeds through NFTs.

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While there was found evidence of money laundering risk, the regulator admitted there was only "limited evidence" of terrorist financing risk with NFTs. The Treasury noted that the participants are most vulnerable to money laundering with art-collateralized loans.

"Asset-based lending can be used to disguise the original source of funds and provide liquidity to criminals," the regulator said.

Chainalysis Detects 'Significant' Wash Trading in NFT Market

To combat money laundering, the Treasury suggested creating information-sharing programs to "foster transparency among art market participants." The regulator also said NFT marketplaces should follow the FinCEN rules by enhancing due diligence and applying AML/CFT requirements.

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