The Royal United Services Institute (RUSI) has published a report assessing the money laundering risks inherent in the NFT market, questioning whether the burgeoning digital art craze has become a “new frontier” for money laundering.
“To start with, NFTs are most often purchased with cryptocurrencies on online marketplaces. Cryptocurrencies are routinely exploited for malicious means, such as obfuscating the source of criminal proceeds and, despite transactions being traceable, more sophisticated criminal actors use a variety of techniques to disrupt investigations by law enforcement,” the RUSI report reads.
RUSI also contends—as Decrypt has outlined previously—that NFTs can be exploited by money launderers in a similar way to the traditional art market.
“Criminal actors can hack into user accounts on NFT marketplaces and transfer NFTs to their own actions. After transferring the NFTs, the hacker can quickly sell the stolen token(s) and attempt to launder the proceeds,” RUSI said.
RUSI also claims the digital aspect of these tokens also creates room for “other novel risks.”
These include creators “hiding” information within the tokens, which, in theory, could be about software vulnerabilities. The NFT could then be used as “the transfer mechanism to share this information between two criminal parties.”
