The United States Treasury Department is concerned about illegal activity and illicit money laundering through Decentralized Finance (DeFi).
The U.S. Treasury Department issued a study titled “Illicit Finance Risk Assessment of Decentralized Finance” on Thursday, April 6, focusing on how illegitimate actors exploit decentralized finance (DeFi).
Actors from the Democratic People’s Republic of Korea (DPRK), digital asset fraudsters, computer hackers, ransomware criminals, and fraudsters are unlawfully utilizing the decentralized financial industry to move and launder their illicit cash.
All this security advice is intended to fill the gap in Anti-Money Laundering (ALM) and Combating the Financing of Terrorism (CFT) oversight provided by the United States and apply it to the emerging blockchain financial world.
According to the 42-page report, DeFi services cannot incorporate AML and CFT regulations or other protocols to identify users, allowing criminals to transfer funds and launder them quickly and anonymously.
Brian Eddie Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence of the U.S., flashed light on the fact that “risk assessment plays a foundational role in promoting understanding of the illicit financial risk environment and more efficiently protecting the integrity of the U.S. financial system.”
Nelson pointed out that North Korea is a major region involved in money laundering through DeFi. Furthermore, to prevent DeFi services abuse from criminals, he said, “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 regulation and sanctions obligations.”
Also read: CFTC Technology Committee met in Washington to Discuss DeFi
