NFTs have been ruling over the internet like anything. It has been a topic of conversation all over the world. But are you aware that NFTs are used for money laundering? I know this might sound shocking. But that’s true! Want to know how? Here is a post that will tell you how NFTs are used for money laundering.
Most of you must have heard about NFTs and money laundering. However, if you are not aware, NFTs are the Non-Fungible Tokens that are unique and not replaceable. NFTs can be used to represent all kinds of things like music, art, or anything else. Money laundering is essentially cleaning money. It is an activity to clean the money gained via illegal means and show it as if it is from a legitimate business.
We know that Non-Fungible Tokens (NFTs) have been a controversial topic. Let us start with how NFTs are used for money laundering without losing time.
Relation Between NFTs And Money Laundering
Before knowing how NFTs are used for money laundering, you must know both are connected to each other.
Earlier, people used NFTs for tax benefits, but now it is taxable. However, it is useful in the money laundering world. Criminal organizations create special NFTs and advertise them on the NFT Marketplace. Then, they purchase these NFTs by covering their identity. They repeat the same process to make their illegal money legal.
NFTs are jpeg images. Any organization can create unique NFTs and photoshop them. They can list these NFTs for 200,000 USD and buy them for themselves. They can use the illegal money, put it in an account, and buy their NFT for $200,000. This is happening with the NFT communities.
As NFTs are considered to be subjective, they usually don’t face any investigation from the regulators. This is one of the main reasons why NFTs are becoming a vehicle for carrying out illegal activities like money laundering.
AML (Anti-Money Laundering) regulations and KYC (Know Your Customer) are unavailable on all NFT Marketplaces. So, it is possible that any person can open an account and make sales without disclosing his identity. Not just this but, criminals may hack an account to make sales and then disappear. This can also be used for inflating the prices of NFTs artificially.
Also Read, NFTs Vs Cryptos? Which One Is The Best?
Can Money Laundering Of NFTs Come To An End?
Many Marketplaces practice KYC or AML, while many verify the creator. However, there are many Marketplaces where anyone can create an account and sell anything for whatever price they want.
Cryptocurrencies are widely accepted and used. It is also giving rise to criminal activities. Frauds like money laundering have also increased because of NFTs. So, it is very important to mitigate these problems that are taking place with NFTs.
But NFTs are going to see more regulations soon. Governments worldwide are trying to keep an eye on NFTs to tackle their involvement in criminal activities like money laundering, tax evasion, and others. The various lawmakers and NFT marketplaces have to reduce the risks involved with NFTs. This will help in ending up this trend of money laundering. The exchanges should focus on KYC or AML regulations to reduce these criminal offenses like money laundering.
In this post, we have explained how NFTs are used for money laundering and any changes to mitigate such issues. We hope it was an informative post for you and you enjoyed reading it. Do share if you know how money laundering through NFTs can be reduced.
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Frequently Asked Questions
Q1. What Is Wash Trading NFTs?
Wash trading is a process through which the prices of the NFTs are raised when a person sells it between two of his digital wallets. They sell it to themselves at higher prices than the marketplace.
Q2. How Is Art Used For Money Laundering?
Art pieces are subjective, so they can be used for money laundering. You can buy items through illegal money and resell them and make money legal.
Q3. Can You Launder Money Through Art?
Yes, money laundering through art is possible. You can buy art by using illegal money and then sell it to make money legally.
Q4. What Are The Methods Of Money Laundering?
There are various traditional money laundering methods like using foreign exchange, smurfing, foreign accounts, investment in diamonds, and many others. Few modern money laundering methods are online banking, virtual currency like cryptos, fake identity, and so on.