US Senate Proposes to Force DeFi Services to Comply with AML Requirements
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July 20, 2023

A bipartisan bill proposed by a group of US senators proposes that DeFi protocols must introduce strict AML controls on their users.

The bill has been sponsored by Banking Committee members J. Jack Reed and Mike Rounds, as well as Mitt Romney and Mark Warner.

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The goal of The Crypto-Asset National Security Enhancement and Enforcement Act is to "combat the increase in crime associated with the use of digital assets, as well as eliminate opportunities to avoid AML and penalties that are critical to national security."

The bill establishes requirements for "anyone who controls" the DeFi protocol or provides access to it [through an interface]. In the absence of such persons, liability extends to those who have invested at least $25M in the development of the project.

These regulatory authorities must verify and collect user information, maintain AML programs, report suspicious activity to the authorities, and block the use of the protocol by sanctioned individuals and organizations.

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