The report examines the vulnerabilities in DeFi, together with potential gaps in the USA’ Financial institution Secrecy Act/anti-money laundering regulatory, supervisory, and enforcement regimes for DeFi. We first focus on how Treasury defines DeFi, the report’s findings concerning the usage of DeFi companies within the technique of transferring and laundering illicit proceeds, the BSA’s utility to DeFi companies and the influence of decentralization on BSA protection, and the report’s suggestions. We then focus on state efforts to manage digital property and federal enforcement actions towards cryptomixers, together with the problem to OFAC’s authority. We conclude with a dialogue of the main focus of state regulators on BSA/AML insurance policies and procedures and steps companies within the digital asset house can take to mitigate compliance threat.
Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Client Monetary Providers Group, leads the dialog, joined by Lisa Lanham, a companion within the Group, and Peter Hardy, a companion in and Co-Chief of the agency’s Anti-Cash Laundering Group.
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