(MENAFN) The US Treasury Department has issued a warning that cybercriminals and ransomware attackers are using decentralized finance (DeFi) services to transfer and launder their illicit proceeds. According to a statement released after the publication of its 2023 DeFi Illicit Finance Risk Assessment, many DeFi services that have anti-money laundering and countering the financing of terrorism obligations fail to implement them, leaving vulnerabilities that can be exploited by illicit actors.

Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson emphasized the importance of risk assessments in promoting understanding of the illicit finance risk environment and protecting the integrity of the US financial system. The department's assessment found that criminals, scammers, and North Korean cyber actors are among those using DeFi services in the process of laundering illicit funds.

Nelson urged the private sector to use the findings of the Treasury's assessment to inform their own risk mitigation strategies and prevent illicit actors from abusing DeFi services. He highlighted the need for greater attention to be paid to the risks posed by these services, given the potential for them to be used in illicit activities.

DeFi has become increasingly popular in recent years, offering financial instruments without using traditional intermediaries such as banks, exchanges, and brokerages. These services can provide alternative payment systems by using blockchain, smart contracts, and cryptocurrencies. However, the lack of oversight and regulatory compliance in the DeFi space has raised concerns about its potential for illicit activities and the need for greater scrutiny and regulation.

Overall, the Treasury Department's warning underscores the risks associated with DeFi services and the need for greater vigilance and regulatory oversight to prevent their exploitation by cybercriminals and other illicit actors. The private sector must take proactive steps to address these risks and ensure that DeFi services are used in a responsible and lawful manner.

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