WASHINGTON : The U.S. Treasury Department on Friday issued a set of recommendations to combat illicit finance in the high-value art market and warned that the emerging digital art market, such as non-fungible tokens , may present new risks.
It said that those most vulnerable in the market are businesses offering financial services that are not subject to anti-money laundering or countering terrorism financing obligations, warning that asset-based lending"can be used to disguise the original source of funds and provide liquidity to criminals."
The study also said that depending on the structure and market incentives, the digital art market, such as NFTs, may present new risks, as the characteristics of digital art make it vulnerable to money laundering. The study recommended the consideration of several options to address the risks, including updating training for law and customs enforcement, enhancing private sector information-sharing and applying anti-money laundering and countering terrorism financing requirements to certain participants in the art market.