According to a statement released by the US Treasury Department on Thursday, Decentralized Finance (DeFi) has become the epicenter of North Korean hackers, ransomware attackers, thieves and scammers who use it to transfer and launder the proceeds of their illegal activities.
DeFi may be a national threat
According to the observations of a new assessment of illicit financial risks on DeFi carried out by the Treasury, criminals are taking advantage of loopholes in the United States and international anti-money laundering (AML) and the regulation of the financing of terrorism, as well as in the technology that is used to support financial services.
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The Biden administration commissioned a 39-page report concluding that the most significant potential for involvement in illegal financial activity in this sector is posed by DeFi providers who do not fulfill their commitments to combat money laundering and counter the financing of terrorism (CFT).
The Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian Nelson, was quoted as saying:
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.
DeFi has to comply with US regulations
The report recommends that the US government strengthen its AML/CFT regulatory oversight and consider offering more guidance to the “private sector” on compliance checks for DeFi services.
The paper’s findings, which call for some revisions to the legislation, come at a time when the Joe Biden administration is proposing a more comprehensive regulatory framework for cryptocurrencies and other forms of payment that are facilitated with blockchain technology.
In September, the administration issued a directive to aggressively pursue investigations and enforcement measures against illegal conduct — asking the Securities and Exchange Commission (SEC) and other regulators to do the same.
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