We have in the news a horrible sounding story about carcinogenic ammonia and formaldehyde leaking from graves in Northern Ireland into the ground water.
Lets make something clear ammonia is not a carcinogen, also the soil bacteria may well be able to degrade formaldehyde. Zhao, Geng, Fan, Tao and Hou in BIOTECHNOLOGY AND BIOPROCESS ENGINEERING, 2013, Volume:18,Issue:2, Pages:300-305 report how a soil bacteria (Paracoccus sp FD3) is able to degrade formaldehyde. This paper also lists some other bacteria which can degrade formaldehyde.
I think before we assume that the gravedigger is right that the graves are a menace to the living, someone should consider how much of the formaldehyde will be able to migrate out of the graveyard into the ground water and how much will be degraded by the bacteria.