Decentralized cryptocurrencies pose a threat to national security, according to the Treasury. Regarding the risk assessment for illegal funding in 2023, the US Treasury Department issued a press release. After thorough research into the decentralized finance industry, the published report discusses how cybercriminals, thieves, scammers and ransomware perpetrators use DeFi services to transport and launder their ill-gotten money.
This is why cryptocurrencies are a national security concern. Brian E. Nelson, the Treasury Secretary responsible for counterterrorism and financial intelligence, emphasized that the US Treasury Department’s assessment found that illegal actors, including criminals, con artists and North Korean cyber actors, DeFi- services used to wash. illegal funds. According to them, the factor that enables bad actors to exploit the crypto space is the non-compliance of DeFi services with AML/CFT and sanctions obligations.
“DeFi services that engage in covert activities under the Bank Secrecy Act have AML/CFT obligations, regardless of whether the services claim to be currently decentralized or plan to become,” the press release said. Contributing to the frequent and easy attack on DeFi are the weak or non-existent AML/CFT controls for DeFi services in some jurisdictions, along with poor cyber security by DeFi services, which enable the theft of funds.
To shed more light on their position, the Treasury noted that DeFi allows consumers to transact without the need for a middleman and, according to them, creates a high chance of money laundering. The paper also highlights ways to conduct assessments and steps to mitigate the dangers associated with DeFi.
These steps “strengthen US AML/CFT regulatory oversight, consider additional guidance for the private sector on DeFi services’ AML/CFT obligations and assess improvement to address any AML/CFT regulatory gaps related to DeFi services. to address.” The research highlights the need for increased regulatory oversight and suggests that additional regulations for DeFi services be considered by the US government.