Introduction
Against the backdrop of accelerated integration of the global digital economy, the methods of cross-border fund receipt are rapidly shifting from the traditional bank card system to blockchain networks.
Today, an increasing number of merchants—spanning sectors from NFT art and metaverse real estate to cross-border e-commerce and freelance services—are beginning to accept cryptocurrencies as a form of payment.
While this transformation significantly enhances payment efficiency and expands transaction boundaries, it also brings dual impacts: it propels cross-border payment acquisition to the forefront of financial innovation, yet simultaneously provides new hidden channels for illegal activities such as money laundering. Faced with this trend, how can Web3 cross-border traders effectively identify and mitigate money laundering risks in their operations? This article will conduct a systematic analysis centered on this question.Evolution of Payment Systems: From Account-Based to Address-Based
To understand the new anti-money laundering (AML) challenges faced by Web3 cross-border payment acquisition, it is first necessary to clarify the fundamental differences between its underlying operational logic and that of traditional models.
As illustrated in the figure below, the traditional Web2 payment acquisition process is still built around centralized financial institutions such as card networks, acquiring banks, and clearing banks—a model known as the “account-based system.” In the Web3 world, however, this process has been completely transformed:
In the traditional Web2 ecosystem, cross-border payments are built around identity: all transactions must rely on trusted intermediaries such as banks and payment institutions to record and settle in their private ledgers, forming a closed system.
In contrast, Web3 has constructed an open payment system. Here, a payment request is not tied to just an account, but to a “pseudonymous digital address” generated through technology. During payments, there is no need for deductions or settlements via banks or payment platforms—users can complete peer-to-peer transactions directly. This mechanism relies on algorithms and networks, rather than the credit of a centralized institution.
The shift from Web2’s “account-based system” to Web3’s “decentralized settlement + address-based system” is not merely a technological upgrade, but a fundamental transformation of the underlying financial paradigm.
Web3’s payment structure has made cross-border payments faster and more accessible, breaking free from national and traditional banking constraints. However, it is precisely these open and pseudonymous characteristics that have elevated money laundering risks from “offline concealment” to “on-chain invisibility.” Shielded by anonymous addresses and smart contracts, illicit funds can be infinitely split and mixed, flowing into the massive data stream like water droplets.
On-Chain Payment Acquisition: Common Money Laundering Tactics in Cross-Border Payments
In Web3 cross-border payments, money laundering activities exhibit high technicality and concealment. Below are summaries of several typical tactics:
Tactic 1: Money Laundering via Anonymizing Coin Mixing
Money launderers use “coin mixers” to blend illicit funds with other transactions, thereby severing their origin and hiding traces. Subsequently, these “cleaned” funds can be used to purchase physical goods in cross-border payments or converted into fiat currency, completing the legalization of illegal proceeds. The core purpose of coin mixing is to block on-chain tracking, obfuscate transaction paths, and make it difficult for payment acquirers to trace fund sources.
Core of the Tactic: Leveraging “coin mixing” for anonymity, rendering funds untraceable.
Tactic 2: On-Chain Money Laundering via DeFi Protocols
Money launderers exploit the openness and composability of decentralized finance (DeFi) protocols to achieve rapid, complex fund transfers. Through operations such as cross-chain bridging, asset swapping, and yield generation, they complicate fund paths to a degree that defies manual analysis, leaving tracking efforts mired in the vast sea of on-chain data.
Typical operations include:
- Cross-chain bridge conversion: Transferring stolen funds between different blockchain networks via cross-chain bridges to increase tracking difficulty.
- Asset swapping: Exchanging one asset (e.g., stolen ETH) for another (e.g., USDT) on decentralized exchanges.
- Staking and lending: Depositing stolen funds into DeFi staking pools to earn yields, or using them as collateral to borrow other “clean” assets for payments.
Core of the Tactic: Creating complex fund flow paths to escalate tracking challenges.
Tactic 3: Money Laundering via Fake Trade Obfuscation
Money launderers conduct fake transactions through cross-border e-commerce websites they control, using illicit funds to purchase their own goods. After the websites convert the received cryptocurrencies into fiat currency, the illegal funds are transformed into legitimate sales revenue.
Core of the Tactic: Using fake cross-border trade as a cover for money laundering activities.
Tactic 4: High-Value Money Laundering via NFT Speculation
Money launderers launder funds through a self-directed “one-man show”: first creating an NFT, then purchasing it at an exorbitant price using another of their own wallets. The funds are thus transferred from one pocket to the other, rebranded as legitimate “art sale proceeds” that can be used normally afterward.
Core of the Tactic: Exploiting the lack of standard pricing for NFTs to fabricate non-existent commercial transactions through self-buying and self-selling, thereby legitimizing illicit funds.
Core Risk Control Challenges: Multiple Dilemmas in Anti-Money Laundering (AML)
AML efforts for Web3 cross-border payment acquisition are no longer a simple compliance issue, but a systemic challenge involving technology, law, risk control, and international collaboration. The fundamental contradiction lies in: a new decentralized financial system has taken shape, but traditional regulatory logic has not kept pace, resulting in structural regulatory gaps.
1. Technological Level: Identification Blind Spots on Transparent Ledgers
Blockchain transparency is far from sufficient for AML purposes. We can see transactions, but cannot identify “who is transacting” or “why the transaction is occurring.” This fundamental contradiction manifests in four key technological dilemmas:
- Dilemma 1: Protocol Ownership Vacuum, Unaccounted Liability
DeFi protocols like Uniswap lack clear responsible parties, leading to no accountability when risks arise and leaving regulators with no way to intervene. - Dilemma 2: Smart Contract Black Boxes, Unclear Intentions
Money launderers can package multiple steps into a single smart contract call, making it difficult for risk control systems to parse the underlying real business logic. - Dilemma 3: Cross-Chain Interactions, Broken Tracking Chains
When funds are transferred between different blockchains, their original risk identities cannot be maintained, and tracking chains are severed. - Dilemma 4: Privacy Tools, Contaminated Data
Technologies like coin mixers can completely disrupt fund flow paths, rendering traditional risk control models that rely on path analysis completely ineffective.
2. Legal and Regulatory Level: Ambiguous Responsibilities and Boundaries
If technological dilemmas mean “seeing but not recognizing,” then legal and regulatory challenges mean “knowing the problem exists but not finding the responsible party.
Traditional regulation centers on clear territorial jurisdiction and responsible entities—yet Web3’s decentralized structure is the exact opposite. When issues arise with “ownerless protocols” like Uniswap, regulators face a fundamental dilemma: among numerous roles including development teams, governance participants, and users, there is no clear party to assume liability.
The Tornado Cash case raises further questions: Does publishing neutral open-source code constitute aiding and abetting money laundering?
The cross-border nature of Web3 payment acquisition leads to blurred regulatory boundaries. A single transaction may be subject to the jurisdiction of multiple countries, or none at all due to law enforcement difficulties—leaving practitioners navigating the gap between regulatory overload and regulatory vacuum.
3. Operational and Risk Control Level: Challenges of Second-Level Decision-Making and Irreversible Settlement
Web3’s “transaction equals settlement” feature minimizes the window for risk control. Payment acquirers must make risk judgments in an extremely short time, trapped in the dilemma of “false positives against legitimate users” and “letting illegal funds slip through.”
Additionally, the industry generally relies on outdated black-box risk control models and lacks a unified definition of “suspicious transactions,” resulting in inconsistent risk assessment standards. Once a mistake is made, funds are irretrievably lost due to the irreversibility of settlements.
4. International Collaboration Level: Disconnect Between Global Transactions and Fragmented Regulation
Web3 payment acquisition can be completed in minutes, yet judicial assistance and regulatory responses take months. This has spawned a phenomenon where institutions exploit lax offshore licenses to take on high-risk businesses at the lowest cost, creating a vicious cycle of “bad money driving out good money.”
Meanwhile, there is a fundamental conflict between the openness of on-chain data and privacy protection regulations governing off-chain identity information, further exacerbating regulatory lag.
Building the Future Path: Design of a Systematic Compliance Framework
AML in Web3 cross-border payment acquisition is an interconnected systemic challenge. It involves multiple dimensions including technology, law, risk control, and global collaboration, primarily:
- Technological decentralization: Leading to the absence of clear legal responsible parties.
- Ambiguous legal provisions: Making it difficult for traditional risk control measures to intervene proactively.
- Inconsistent regulatory standards across countries: Ultimately weakening the intensity of crackdowns.
These dimensions trigger a chain reaction like dominoes. Therefore, payment acquirers can no longer focus on just one aspect—they must construct a systematic compliance framework to build a stable bridge between the “decentralized” technological world and “centralized” regulatory requirements
Conclusion
“Anti-money laundering (AML)” has never been a set of restrictive rules—it is an opportunity to rebuild the trust system. When funds can flow freely across borders, when smart contracts replace banks, and when algorithms execute transactions automatically, the ultimate competition between enterprises is no longer just about speed, but about trustworthiness.
For companies providing payment acquisition services, investing in building a comprehensive compliance system is not merely a mandatory safety measure, but a way to forge core competitive advantages. It enables you to proactively demonstrate to regulators, partners, users, and investors that your business is standardized and transparent. In this way, compliance investments—once regarded as costs—are transformed into valuable trust capital.
Web3 cross-border payments are undergoing a critical shift: from “patching problems after they occur” in the past to proactive planning and system building. If you require professional legal advice or compliance framework design while exploring Web3 cross-border payment businesses, Mankun Law Firm boasts extensive experience in this field and welcomes your inquiries at any time.
