UK considers NFT a potential tool for financial crime

Sat 04 Dec 2021 ▪ 9h05 ▪ 3 min read — by Rudy Bauer

The Royal United Services Institute for Defence and Security Studies (RUSI) is interested in the potential use of non-fungible tokens (NFT) for money laundering and other financial crimes. The organisation believes that a KYC monitoring system should be put in place to mitigate the risks.

The Royal United Services Institute for Defence and Security Studies (RUSI) was founded in 1831 and is considered the world’s oldest research centre. On 2nd December, it published a report on non-fungible tokens (NFTs) and the potential for their use to commit financial crime.

RUSI points out that NFTs are most often bought on online marketplaces for cryptocurrency, and digital assets are often used to hide the proceeds of criminal activity. Acquiring NFTs could be one of the methods that could hinder law enforcement investigations. RUSI officials insist that a “know your customer” (KYC) system be implemented and monitored on an ongoing basis, as is the case with traditional auctions and cryptocurrency exchanges.

RUSI: art theft is real threat in the NFT sector

There has been a decades-long debate about money laundering through traditional art objects. In June this year, New York Times reporter Graham Bowley wrote that US politicians want art-related auctions to be more transparent. This would reduce possible risks.

RUSI researchers concluded that criminals can also exploit the NFT marketplace. They can hack into the accounts of users registered on marketplaces and transfer NFT to other accounts. The criminals can then sell the stolen items and then withdraw the proceeds.

RUSI believes that the crime rate associated with NFT collection can be minimised. This requires the implementation of two-factor authentication (2FA) and strong cybersecurity. In addition, RUSI proposes creating a registry of stolen NFTs to store copies of lost works of digital art.

In any case, the establishment of a register of stolen NFTs seems to be the appropriate and timely step in the fight against cyber theft. For instance, the Art Loss Register, created in 1991 to protect works of traditional art, has long been proven highly effective.

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Rudy Bauer

Photographe, Vidéaste, webdesigner et enfin rédacteur pour CoinTribune: l'image, le digital et la blockchain sont mon dada.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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