U.K.’s leading defense and security think tank<em>,</em> The Royal United Services Institute (RUSI) has published a report questioning whether non-fungible token (NFT) is the new “frontier” for money laundering. The agency suggests that the regulatory framework applied to crypto exchanges can also be applied to online auction houses for NFTs.
<h2 class="sc-1t633a1-0 sc-1td8nyy-6 knPoCc kefNUO">RUSI Explores NFT Money Laundering Risks</h2>
On Dec. 2, the world’s oldest defense and security think tank, The Royal United Services Institute (RUSI) <a href="https://rusi.org/explore-our-research/publications/commentary/nfts-new-frontier-money-laundering" target="_blank" rel="nofollow noopener">published</a> a new report covering NFTs to determine whether the nascent asset class can be used for money laundering.

<em> </em>Titled “NFTs: A New Frontier for Money Laundering?”, the report warns:
<blockquote><em>“This technology can raise alarm bells from a money laundering and financial crime perspective. 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.”</em></blockquote>
The researchers stressed that NFTs can be exploited in a similar way to that of the traditional art market.  “An art heist is also possible within the NFT realm,” the RUSI report adds.
<blockquote><em>“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,”</em> RUSI said.</blockquote>
<h2><strong>Tackling the Cybercrimes</strong></h2>
In addition, the digital aspects of these tokens also create the possibilities for “other novel risks.” Some of these include <a href="https://www.cryptoknowmics.com/news/building-nft-tanks-on-the-blockchain-with-age-of-tanks/">NFT creators</a> attempting to hide information within the tokens, which, in turn, could be about software vulnerabilities. The tokens could then be used as “the transfer mechanism to share this information between two criminal parties.”

Despite the risks, the report highlights that “NFT forgery and theft can also be mitigated.” The agency suggests that <a href="https://www.cryptoknowmics.com/news/kalao-aggregates-nft-marketplaces-on-avalanche/">NFT marketplaces</a> use two-factor authentication (2FA) solutions and maintain “good cyber security” practice including developing a registry of stolen NFTs that “would mimic the Art Loss Register.”

U.K Security Think Tank Raises Concerns Over NFT Money Laundering

The Royal United Services Institute (RUSI) has published a report questioning whether NFT is the new “frontier” for money laundering.

Jafrin is a cryptocurrency journalist/researcher fascinated by the world of decentralization. She is hopeful towards blockchain’s innovation and its potential to reshape the world for good. Currently, she is bringing out the best of cryptosphere via covering the latest ins and outs of the blockchain space.

U.K Security Think Tank Raises Concerns Over NFT Money Laundering

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