See here for information on formaldehyde. Studies of workers exposed to high levels of formaldehyde, such as industrial workers and embalmers, have found that formaldehyde causes myeloid leukemia and rare cancers, including cancers of the paranasal sinuses, nasal cavity, and nasopharynx.
The International Agency for Research on Cancer (IARC), part of the World Health Organization, has classified formaldehyde as a Group 1 carcinogen, meaning it is carcinogenic to humans.
See this Consumer Product Safety Commission report for more information on formaldehyde.