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Financial crime in the decentralized finance ecosystem: new challenges for compliance

Financial crime in the decentralized finance ecosystem: new challenges for compliance As decentralized finance (DeFi) has collected substantial promotion, investment and cryptographic development as a new model for numerous financial operations over the last months. As DeFi models and technology are quite unique, authorities have not been engaged much yet. However, these non-regulated financial markets will be overlooked for no long by the regulators. Therefore, the purpose of this paper is to analyse and evaluate the new challenges for financial crime compliance which need to be tackled very soon.Design/methodology/approachThe research relied on secondary sources of data, using secondary research to collect archival data in the form of documents. Content and thematic analyses were used to synthesize the collected dataFindingsDeFi is considered to be one of the major steps towards adopting crypto masses. It is expected that DeFi will play a significant role in future and provide the present banking system with a feasible alternative. Therefore, it is crucial that the DeFi industry must address the main risks to ensure its “user” full compliance.Originality/valueThis research is the first to analyse the emerging challenges of fighting financial crime in the DeFi ecosystem. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Crime Emerald Publishing

Financial crime in the decentralized finance ecosystem: new challenges for compliance

Wronka, Christoph
Journal of Financial Crime , Volume 30 (1): 17 – Jan 2, 2023
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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1359-0790
eISSN
1359-0790
DOI
10.1108/jfc-09-2021-0218
Publisher site
See Article on Publisher Site

Abstract

As decentralized finance (DeFi) has collected substantial promotion, investment and cryptographic development as a new model for numerous financial operations over the last months. As DeFi models and technology are quite unique, authorities have not been engaged much yet. However, these non-regulated financial markets will be overlooked for no long by the regulators. Therefore, the purpose of this paper is to analyse and evaluate the new challenges for financial crime compliance which need to be tackled very soon.Design/methodology/approachThe research relied on secondary sources of data, using secondary research to collect archival data in the form of documents. Content and thematic analyses were used to synthesize the collected dataFindingsDeFi is considered to be one of the major steps towards adopting crypto masses. It is expected that DeFi will play a significant role in future and provide the present banking system with a feasible alternative. Therefore, it is crucial that the DeFi industry must address the main risks to ensure its “user” full compliance.Originality/valueThis research is the first to analyse the emerging challenges of fighting financial crime in the DeFi ecosystem.

Journal

Journal of Financial Crime – Emerald Publishing

Published: Jan 2, 2023

Keywords: Compliance; Financial crime; Monetary systems; Decentralized finance; DeFi

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