The U.S. Treasury Department released the 2023 DeFi Illicit Finance Risk Assessment today, saying that DeFi is now used by bad actors to launder money and needs regulation.
Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said, "our assessment finds that illicit actors, including criminals, scammers, and North Korean cyber actors, are using DeFi services in the process of laundering illicit funds. 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 (anti-money laundering and countering the financing of terrorism) regulations and sanctions obligations, to prevent illicit actors from abusing DeFi services."
According to the assessment, "the primary vulnerability that illicit actors exploit stems from non-compliance by DeFi services with AML/CFT and sanctions obligations." In addition, it includes recommendations for U.S. government actions to mitigate the illicit finance risks associated with DeFi services. These include:
- strengthening U.S. AML/CFT regulatory supervision
- considering additional guidance for the private sector on DeFi services' AML/CFT obligations
- assessing enhancement to address any AML/CFT regulatory gaps related to DeFi services
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Policy and Regulation