- According to the Treasury, there are AML/CFT regulations that DeFi services must follow.
- The Treasury has said that it would be releasing a strategy plan in the next few weeks.
In one of three national risk evaluation reports released on Wednesday, the U.S. Treasury Department said that virtual assets are becoming more popular with criminals, fraudsters, and illicit players.
Highlighting illicit financing challenges, vulnerabilities, and hazards in the U.S., the agency issued its 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing.
Counter Strategy Underway
Moreover, the agency laid out the ways criminals utilize cash and, more recently, cryptocurrency to launder money for crimes including fraud, drug trafficking, human trafficking, and corruption. Also, the Treasury has said that it would be releasing a strategy plan in the next few weeks that will address the concerns raised in Wednesday’s reporting.
According to the Treasury’s money laundering report, while the majority of drug trafficking revenues are laundered using cash, the use of virtual assets is becoming an increasingly significant worry for U.S. law enforcement.
Despite volatility after Treasury’s 2022 report, virtual assets made a strong comeback in the autumn of 2023, according to the department. There are regulations that virtual asset service providers must follow regarding sanctions, anti-money laundering, and preventing the funding of terrorism.
The Treasury Department defines VASPs as a number of different things, including but not limited to: the transfer and storage of virtual assets; the exchange of virtual assets with fiat currencies; and the exchange of virtual assets across various kinds. According to the Treasury, some VASPs disregard U.S. regulations by claiming they are exempt or by failing to register properly.
Another set of difficulties is inherent with decentralized finance. According to the Treasury, there are AML/CFT regulations that DeFi services must follow as they are considered financial institutions under the Bank Secrecy Act.
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