A new report from the United States Department of the Treasury looking at decentralized finance found that actors in the Democratic People's Republic of Korea, as well as other fraudsters, can exploit vulnerabilities to facilitate money laundering.
In its report "Illicit Funding Risk Assessment of Decentralized Finance" published on April 6, the US Treasury Department. saying many groups involved in North Korean illicit activities benefited from some DeFi platforms' non-compliance with certain anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. According to the report, insufficient AML/CFT controls and other shortcomings in DeFi services โenable the theft of funds.โ
โIllicit actors, including North Korean criminals, fraudsters and cyber actors, are using DeFi services in the process of laundering illicit funds,โ said Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence. โCapturing the potential benefits associated with DeFi services requires addressing these risks.โ
He @The United States Treasury has just published a risk assessment on #DeFi illicit financing risk. A risk assessment is a study that is often the first step towards regulation. Any regulation on #crypto It must be compatible with the technology. https://t.co/iag84fJ67G
โPerianne (@PerianneDC) April 6, 2023
The report noted that some projects had "affirmatively promoted the lack of AML/CFT controls as one of the primary goals of decentralization," noting that actors were often able to circumvent US and UN sanctions. However, Treasury reiterated that "most money laundering, terrorist financing, and proliferation financing" occurred using fiat currency or outside of the digital asset ecosystem.
The officials recommended increasing AML/CFT regulatory oversight for platforms offering DeFi services, guidance to DeFi platforms regarding AML/CFT, and addressing any regulatory gaps.
"DeFi services today often do not implement AML/CFT controls or other processes to identify clients, allowing profits to be overlaid instantly and pseudonymously, using long strings of alphanumeric characters instead of names or other personally identifiable information".
Related: In crypto winter, DeFi needs an overhaul to mature and grow
The evaluation was in in accordance with the executive order on digital assets signed by President Joe Biden in March 2022. Since the implementation of the EO, many US government agencies have begun to investigate the potential impact of aspects of the digital asset space on the country's financial system and infrastructure. existing payment. In September 2022, the Treasury published a report which included countering the illicit financial risks of crypto assets.
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