The U.S. Treasury Department on Thursday published its first illicit finance risk assessment report focused specifically on decentralized finance, or DeFi. 

The 42-page report states that "actors like the Democratic People’s Republic of Korea (DPRK), cybercriminals, ransomware attackers, thieves, and scammers are using DeFi services to transfer and launder their illicit proceeds" and notably contends that DeFi services that would be subject to the Bank Secrecy Act "fail to comply with AML/CFT obligations, a vulnerability that illicit actors exploit."

The report goes on to state:

"A lack of a common understanding among industry participants of how AML/CFT obligations may apply to DeFi services exacerbates this risk. In some cases, industry providers may purposefully seek to decentralize a virtual asset service in an attempt to avoid triggering AML/CFT obligations, without recognizing that the obligations still apply so long as the provider continues to offer covered services."

(by Michael McSweeney)