On February 4, 2022, the United States Treasury Department released a report that indicated non-fungible tokens (“NFTs”), currently, one of the trendiest cryptocurrency structures, may become a new avenue for money launderers and other nefarious ne’er do wells. Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art (treasury.gov).
NFTs are digital tokens linked to images, videos, audio files and other media, that are then sold to the public. Essentially, the Treasury report indicated it had found a number of schemes were centered around the art industry, potentially leading to financial crimes. The report detailed the art world’s potential vulnerabilities to financial crimes, allowing criminals to move money and evade regulatory and law enforcement scrutiny
In short, it would seem those interested in offering NFTs to the public may, ultimately, be required to inquire as to the purchasers of their NFTs. However, in the meantime and in consultation with securities counsel, it may not be a bad idea to start knowing who your customer is now.