NFT Marketplace Controls

Challenge

An FRA Partner, while Head of Regulatory Affairs at a well-known online gaming company, was responsible for developing the AML and Fraud controls to protect the company and its customers from exploitation during the launch of its Non-Fungible Token (NFT) Marketplace. He was also responsible for monitoring ongoing transactions for new AML and Fraud typologies. Being that NFTs were a relatively new product in 2021, AML and Fraud controls for this space were not fully developed or widely known.

Action

Leveraging a deep understanding of AML and Fraud typologies and related controls facing online gaming and non-bank financial institutions, along with extensive research and outreach to contacts in the crypto space, this FRA partner identified potential gaps and typologies that could be exploited by bad actors to launder funds or defraud the company and its customers. Controls were then built and implemented to prevent such exploits. In addition, an internal NFT taskforce was built and met regularly to walk through potential weaknesses and exploit attempts. 

Result

The internal task force was able to quickly identify trends or patterns of bad actors attempting to exploit the NFT Marketplace. Once these exploits were uncovered, the AML and Fraud team worked closely with the Product team to implement controls and rules to prevent such exploits from working.