The United States Department of Treasury recently released a report that took a closer look at decentralized finance and its role in illicit finance around the world. The 42-page report, which was commissioned by the Biden administration, found that certain DeFi services are not complying with anti-money laundering (AML) and countering the financing of terrorism (CFT) rules, creating a significant illicit finance risk.
According to the report titled “Illicit Finance Risk Assessment of Decentralized Finance”, found that decentralized finance was being used by illicit actors, including ransomware cybercriminals, thieves, scammers, and Democratic People’s Republic of Korea (DPRK) cyber actors, to transfer and launder the proceeds of their illegal activities. This is reportedly being done by exploiting the gaps in DeFi services’ compliance with AML and CFT regulatory regimes.
The Treasury Department believes that businesses operating in the DeFi space lack an understanding of the obligation that is owed to maintain the integrity of AML and CFT rules. The report alleged that certain industry participants willingly decentralized a virtual asset service in a bid to avoid triggering said obligations. The report did acknowledge the relatively small portion that DeFi accounted for when it came to illicit finance risk.
“Capturing the potential benefits associated with DeFi services requires addressing these risks. The private sector should use the findings of this assessment to inform their own risk mitigation strategies and to take clear steps, in line with AML/CFT regulations and sanctions obligations, to prevent illicit actors from abusing DeFi services.”
Brian Nelson, the Treasury Undersecretary for Terrorism and Financial Intelligence.
Former Treasury Department official Alex Zerden told Bloomberg that the department has been trying to provide some clarity to the decentralized finance sector through reports such as the one published today. Reports like these will pave the way for regulatory clarity and ultimately a safer and more compliant crypto industry.
The price of the XRP Ledger blockchain’s native token (XRP) has been rising over the…
Momcozy, a global leader in maternal and infant care, has continued to impress with its…
Local SEO Tampa (https://localseotampa.com/), a trusted digital marketing firm in Florida since 2007, proudly expands…
Birkirkara, Malta, 22nd November 2024, ZEX PR WIRE, VAIOT, a company providing AI-driven Legal Tech…
Dubai, UAE, 22nd November 2024, ZEX PR WIRE, In today’s data-driven world, information has become…
Nicosia, Cyprus, 22nd November 2024, ZEX PR WIRE, The DexWin platform (the first licensed decentralized…