The US Department of the Treasury has released the world’s first DeFi Illicit Finance Risk Assessment, which analyzes decentralized finance (DeFi) services and their vulnerabilities to “illicit activities.”

The assessment found that “cybercriminals, ransomware attackers, scammers, and North Korean hackers” are using DeFi services to launder funds due to “non-compliance” with anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations.

Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson emphasized that addressing these risks is essential to harness the “potential benefits of DeFi services.”

The private sector is urged to use the findings to develop its own risk mitigation strategies and adhere to AML/CFT regulations. Nelson stated,

“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 regulations and sanctions obligations, to prevent illicit actors from abusing DeFi services.”

The US government was also urged to utilize the findings of the risk assessment in addressing the illicit finance risks linked to DeFi services, including “strengthening AML/CFT regulatory supervision,” issuing “guidance” for the private sector, and “assessing enhancements” to close AML/CFT regulatory gaps. In addition, the Treasury has requested input from the private sector to inform future steps.

No link for private sector input was provided in the release.

CryptoSlate’s editorial team is currently reading through the 42-page report and will report on the contents in due course.

The post US Treasury sees ‘potential benefits’ of DeFi following risk assessment appeared first on CryptoSlate.

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