The U.S. Treasury Department is close to releasing a risk assessment analyzing the criminal use of decentralized finance (DeFi). According to Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg, the assessment will provide an in-depth look at the potential for criminal exploitation of DeFi and the associated risks. The report will also provide recommendations for mitigating those risks and will be released in the near future. The assessment is part of the Treasury Department’s efforts to ensure that DeFi is used responsibly and that criminals are not able to exploit it for illicit activities.
Financial crime is a major issue in the banking industry, and regulators are constantly looking for ways to combat it. According to the head of the U.S. Treasury Department’s Financial Crimes Enforcement Network, Kenneth A. Rosenberg, illicit actors are constantly looking for ways to hide criminal activity and launder their proceeds. He spoke at a banking event in Sydney, Australia, and urged regulators to stay ahead of the curve and use the latest technology to detect and prevent financial crime. He also stressed the importance of collaboration between the public and private sectors to ensure that criminals cannot exploit the financial system. By working together, regulators can ensure that the banking industry is safe and secure.
The virtual asset ecosystem is facing a potential threat, according to SEC Commissioner Hester Peirce. Peirce and her team are actively working on an assessment of the threat and will release it soon. The assessment will provide insight into the potential risks and challenges that DeFi services and other elements of the virtual asset ecosystem may face. Peirce is urging the industry to take the threat seriously and to be proactive in addressing any potential risks. The SEC Commissioner is committed to ensuring that the virtual asset ecosystem is secure and that investors are protected.”
The virtual asset industry has seen astounding growth, but often treats regulations and financial crimes compliance as an afterthought. This has been illustrated by North Korea-affiliated groups conducting ransomware attacks, stealing hundreds of millions of dollars’ worth of virtual assets, and laundering the funds to fund their illegal nuclear and ballistic missiles programs. This highlights the potential harms of criminal use of virtual assets and the need for the industry to prioritize regulations and financial crimes compliance.
