Royal United Services Institute (RUSI) warns that NFTs could encourage money laundering

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TL;DR Breakdown

  • RUSI launched a report exposing money laundering possibilities in the NFT space.
  • The research says that criminals are infiltrating the space.

RUSI has launched a report that exposes the possibilities of money laundering in the NFT market. The report further states that Art theft is also a reality within the NFT space. RUSI, a British defense and security think tank, casts whether one can use NFTs to launder money.

The group says the NFT technology raises suspicion of money laundering and financial crime. To their justification, the team cited several red flags. For starters, they say people use cryptocurrencies to buy the digital arts. To them, cryptos are often used for spiteful reasons. And one such reason is to cover the source of illegal proceeds. Although one can trace crypto transactions, some thieves use several ways to block inquiries.

Rusi suggests ground rules for engagement

The released report titled “NFTs: A New Frontier for Money Laundering?” also recommends some rules. It feels there should be a system that exposes the client’s identity. Besides, there should be monitoring mechanisms. They could copy the rules from the traditional art market. Furthermore, the crypto exchange measures should apply when buying non-fungible tokens.

In 1831 the British launched RUSI. So, it is the longest-serving defense in the world. The team is famous for research and giving insights on several fronts. Their latest publication on digital art assets queries their potential for money laundering.

Money laundering is a common thing in the art environment. Crafty people have been using it to clean money for decades. Recently, an investigative reporter from the New York Times hinted something. He said that lawmakers are planning to probe the classified art market. Graham Bowley wrote that secrets are always like a trademark in the art market. Yet, legislators hint that they must look into it. The lawmakers feel that secrecy in the market breeds abuse and several illegalities.

Criminals infesting the NFT space

The research established that miscreants might be penetrating the NFT market. Their core intention is to leverage on potential risks. Besides, criminals can carry out art theft within the digital art space. So far, there are cases of hackers accessing accounts containing digital assets. Then, they steal the tokens and transfer them to other accounts. Upon successful hacking, the miscreants can dispose of the stolen asset. Finally, they end up laundering the proceeds from such dubious transactions.

The research recognizes the security measures of the token. It stated that tokens have robust ways to prove ownership of art. Moreover, the platform can offer protection on an artist’s work. Yet, the hackers still have field days with their hacking escapades.

Researchers at RUSI are optimistic that money laundering in the NFT space can stop. Furthermore, they insist that platforms can control NFT theft through hacking. Also, one can mitigate collectibles forgery.

RUSI suggests that the NFT markets should use a two-factor proof solution to achieve this. They should also enhance their wallet security. Also, the agency suggests that there should be a registry containing stolen NFTs.

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