International Tax Consortium Lists ‘Red Flag Indicators’ of Fraud in NFT Marketplaces

An international tax consortium has issued a list of “red flag indicators” of fraud in non-fungible token (NFT) marketplaces to help banks, law enforcement and private industry crack down on criminal activity. The guidance is the first of its kind from the Joint Chiefs of Global Tax Enforcement, also known as the J5. Founded in 2018, the J5 is made up of representatives of tax agencies from Australia, Canada, the Netherlands, the United Kingdom and the U.S., and is tasked with sharing information and coordinating operations to fight international tax crime. Scams and fraud abound in the crypto markets, and NFTs are no different. Various crimes and bad behavior, from wash trading to forgery to money laundering to straight-up theft, have become increasingly common in the NFT markets. In the document released Thursday, the J5 listed 24 “red flags” for NFT marketplaces, split between “strong” and “moderate” indications of potential fraud.

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