The risk assessment is the first that the Treasury Department is making on NFTs as a means to commit fraud and other crimes.
The Treasury Department found that NFT platforms “lack adequate controls” to combat money laundering and sanctions evasion.
The US Treasury Department said non-fungible tokens (NFTs) are “highly susceptible to use in fraud and scams and subject to theft,” in a new risk assessment on illicit finance, the first to use NFTs as a means to commit fraud to carry out and other crime.
“The report finds that illicit actors can use NFTs to launder the proceeds of predicate crimes, often in combination with other methods to obscure the illicit source of the proceeds of crime,” the Treasury Department said on Wednesday.
The Treasury Department also found that NFT platforms “do not have adequate controls in place” to combat money laundering and sanctions evasion. It therefore recommends further application of regulation on NFTs and the platforms on which they are traded.
A U.S. government investigation into NFTs in March concluded that no specific legislation was needed to address concerns about copyright and trademark infringement. However, the Treasury Department’s assessment addresses more directly the financial aspect of the NFT market.
Read more: NFT providers may require registration to comply with UK money laundering regulations