US Government Seeks to Alleviate Illicit Financing Concerns in DeFi Industry
The United States Treasury Department has released the world’s first-ever evaluation of the risk of illicit financing through decentralized financial systems (DeFi). The report highlights the risks associated with DeFi services. These are being exploited by hackers, ransomware attackers, robbers, and fraudsters to launder money obtained through illegal activities. The report suggests that the private industry should use the results of this evaluation to develop their respective risk mitigation plans. They should take concrete actions following anti-money laundering/counter-financing of terrorism (AML/CFT) rules.
US Treasury Department Highlights Risks of Illicit Financing via Defi Services
The report states that fiat cash and other conventional assets are far more routinely used than virtual assets for money laundering, funding of proliferation, and financing of terrorism. However, DeFi services are being used by bad actors to launder money. They take advantage of loopholes such as the fact that many DeFi providers. They are required to take measures against (AML/CFT if) don’t do so. Noncompliance by DeFi providers with AML/CFT and sanction responsibilities is the key weakness that bad actors exploit.
The report also highlights the risks associated with lax cybersecurity measures by DeFi services. It makes it easier for money to be stolen, and the possibility that certain DeFi services will fall beyond the purview of existing AML/CFT regulations. The report suggests that the private industry should comply with AML/CFT legislation.
Trending Now: Ava Labs Launches Avalanche Evergreen Subnets
The report contains suggestions for U.S. government efforts to alleviate the illicit financing concerns connected with DeFi services. It includes reinforcing U.S. AML/CFT regulatory oversight. It will also help in analyzing improvement to resolve any AML/CFT regulatory gaps about DeFi services.
US Treasury Releases First-Ever DeFi Risk Assessment
The DeFi risk assessment expands on the work begun in response to Executive Order 14067, by the United States Treasury. The Treasury is seeking private sector input to help guide the next measures. It aims to increase the efficiency of the AML regulatory framework and sanction compliance processes in the digital asset arena. It will promote ethical advancements in the DeFi industry.
In addition, the report sheds light on the risks associated with DeFi services and the need for private industry compliance with AML/CFT legislation and penalty duties. The report also provides suggestions for U.S. government efforts to alleviate the illicit financing concerns connected with DeFi services. The Treasury’s efforts to increase the efficiency of the AML regulatory framework and sanction compliance processes in the digital asset arena will promote ethical advancements in the DeFi industry.
