The United States Department of the Treasury has just released the world’s first ever illicit finance risk assessment on decentralised finance (2023 DeFi Illicit Finance Risk Assessment). It urged that the private sector comply with AML/CFT legislation and sanctions responsibilities in order to stop illicit actors from exploiting decentralised financial infrastructure services.
“Actors like the Democratic People’s Republic of Korea (DPRK), cybercriminals, ransomware attackers, thieves, and scammers are using DeFi services to transfer and launder their illicit proceeds. They are able to exploit vulnerabilities, including the fact that many DeFi services that have anti-money laundering and countering the financing of terrorism (AML/CFT) obligations fail to implement them”
Money laundering, financing of proliferation, and financing of terrorist activities primarily involve fiat currency or other traditional assets, not virtual assets, according to the United States Department of the Treasury
U.S Treasury Focused on Improving AML/CFT Compliance
U.S Treasury is striving to improve the efficiency of the AML/CFT regulatory framework and sanctions compliance procedures in the domain of virtual assets, and U.S Treasury will support the business sector to promote responsible innovation in the field of decentralised financial (DeFi). The findings of the report indicate that the United States Federal Government is worried about the performance of the Regulations in DeFi.
According to the research, a number of different organisations are working on building solutions for AML/CFT and sanctions compliance for DeFi services.
However, criminals can still attempt to use these devices for their own gain. The United States Treasury is working with many stakeholders in the market to improve these tools and promote responsible innovation in the DeFi Industry.