Introduction

As the global economy's digitalization process continues to deepen, cross-border payment methods are undergoing a profound transformation. Traditional bank card payment systems are gradually being replaced by distributed networks based on blockchain technology. Today, whether it's NFT art transactions, metaverse virtual real estate purchases, cross-border e-commerce, or freelance services, an increasing number of business scenarios are beginning to accept cryptocurrencies as a payment medium.

This shift not only significantly enhances the efficiency of capital flow and broadens the geographical and formal boundaries of transactions but also brings a dual impact: on one hand, it pushes cross-border acquiring business to the forefront of the wave of financial innovation; on the other hand, it also provides new hidden channels for illegal fund activities such as money laundering. Faced with this trend, how should enterprises engaged in Web3 cross-border transactions effectively identify and prevent money laundering risks in their daily operations? This article will provide a systematic analysis from the perspectives of underlying logic, typical methods, and risk control challenges.

Payment System Evolution: From Account-Based to Address-Based Systems

To understand the new challenges faced by Web3 cross-border payments in the field of anti-money laundering (AML), it is first necessary to clarify the fundamental differences in the underlying logic compared to traditional payment models.

Traditional Web2 payment processes heavily rely on centralized financial intermediaries such as card networks, acquiring banks, and clearing institutions, forming an "account-based" system centered around identity authentication. All transaction behaviors must be recorded and cleared through these trusted third parties in their private ledgers, forming a relatively closed financial loop.

In contrast, Web3 constructs an open payment environment. In this system, the payment entity no longer relies on bank accounts but generates an "anonymous digital address" through cryptographic algorithms. Transacting parties can achieve direct peer-to-peer fund transfers without the need for traditional financial institutions for deduction and clearing. The core of this mechanism lies in algorithmic consensus and network collaboration, rather than the credit endorsement of a centralized institution.

The shift from the Web2 "account-based" system to the Web3 "decentralized settlement + address-based" system represents not only an upgrade in technical architecture but also a fundamental change in the financial paradigm. This transformation endows cross-border payments with advantages such as speed, low barriers, and borderless limitations. However, it is precisely this characteristic of coexisting openness and anonymity that upgrades money laundering risks from "offline concealment" to "on-chain invisibility." Under the cover of anonymous addresses and smart contracts, illegal funds can be infinitely split, mixed, and merged into the vast on-chain data flow, greatly increasing the difficulty of identification and tracking.

On-Chain Acquiring: Common Money Laundering Techniques in Cross-Border Payments

In the context of Web3 cross-border payments, money laundering activities exhibit characteristics of technical sophistication, complexity, and concealment. The following is an in-depth analysis of several typical operational methods:

Technique One: Using Mixers to Anonymize Funds

Money launderers use "mixers" to blend illicit proceeds with large amounts of legitimate transaction funds, severing their source path and obscuring the true flow. Subsequently, these "cleansed" funds can be used in cross-border payments to purchase physical goods or exchanged for fiat currency through exchanges, ultimately completing the transformation of illegal funds into legal form. The core purpose of mixing operations is to interfere with on-chain tracking, confuse audit trails, and make it difficult for the acquirer to trace the funds' original source.

Core Technique: Using mixing technology to erase the fund trail, achieving "coming without a trace, leaving without a shadow."

Technique Two: Utilizing DeFi Protocols to Create Complex Fund Paths

Money launderers leverage the high openness and composability of decentralized finance (DeFi) protocols to achieve rapid cross-chain transfers and complex operations of funds. Through a series of actions such as cross-chain bridging, asset swapping, and staking for yield, the original fund path is complicated to a degree that is difficult to parse manually, causing tracking efforts to get lost in the fog of massive on-chain data.

Typical operations include:

• Cross-Chain Bridge Conversion: Transferring illegal funds across different blockchain networks multiple times via cross-chain bridges to blur their circulation trajectory.

• Asset Swapping: Exchanging one type of crypto asset (e.g., stolen ETH) for another (e.g., stablecoin USDT) on decentralized exchanges (DEXs).

• Staking and Lending: Depositing illicit funds into DeFi staking pools to earn yields or using them as collateral to borrow other "clean" assets for payment.

Core Technique: Significantly increasing tracking costs and difficulty by creating highly complex fund flow paths.

Technique Three: Fabricating Cross-Border Trade to Obscure Funds

Money launderers initiate false transactions through cross-border e-commerce platforms they actually control, using illegal funds to purchase their own goods. After the platform converts the received cryptocurrency into fiat currency, the dirty money is packaged as legitimate cross-border trade revenue.

Core Technique: Using fake trade as a cover to "launder" the nature of the funds.

Technique Four: Using NFT Markets for Self-Trading Money Laundering

Money launderers complete fund transfers through self-orchestrated NFT transactions: first creating an NFT work, then repurchasing it at a high price via another wallet they control. This action transforms the illegal funds, in form, into "art sales proceeds," thereby achieving the purpose of laundering.

Core Technique: Leveraging the lack of an objective pricing mechanism for NFTs to legitimize funds through fictitious transactions.

Core Risk Control Challenges: The Multiple Dilemmas of AML

AML work for Web3 cross-border acquiring has transcended traditional compliance, becoming a systematic project involving technology, law, operations, and international collaboration. The fundamental contradiction lies in: the new decentralized financial system has initially taken shape, while traditional regulatory logic has yet to adapt synchronously, leading to a structural regulatory vacuum.

1. Technical Level: Identification Blind Spots on Transparent Ledgers

Although blockchain ledgers themselves are public and transparent, their support for AML work remains very limited. The system can record transaction behaviors but cannot reveal the "transacting party's identity" and the "true intent of the transaction." This contradiction manifests specifically as four technical dilemmas:

• Dilemma One: Protocol Without an Owner, Responsibility Vacuum
  DeFi protocols like Uniswap lack clear legal entities responsible. When risk events occur, no one bears regulatory accountability.

• Dilemma Two: Black Box Contracts, Intent Hard to Discern
  Money launderers can encapsulate multiple operations within a single smart contract call, making it difficult for risk control systems to parse the true business logic.

• Dilemma Three: Cross-Chain Interactions, Tracking Disconnection
  When funds transfer between different blockchain networks, their original risk identifiers cannot be carried over, causing the tracking chain to break.

• Dilemma Four: Privacy Tools, Data Pollution
  Privacy-enhancing technologies like mixers can completely disrupt fund flows, rendering traditional risk control models that rely on path analysis ineffective.

2. Legal and Regulatory Level: Blurred Responsibilities and Boundaries

If technical dilemmas are "visible but unidentifiable," then the challenges of law and regulation are "knowing where the problem lies, yet struggling to define responsibility."

The traditional regulatory system relies on clear territorial jurisdiction and responsible entities, which is contrary to the decentralized architecture of Web3. When risks appear on "ownerless protocols" like Uniswap, regulatory bodies face a fundamental problem: among multiple roles such as developers, governance participants, and users, they cannot clearly identify the responsible entity.

Cases like Tornado Cash further provoke legal thought: Does releasing neutral open-source code constitute aiding money laundering?

Furthermore, the cross-border nature of Web3 acquiring leads to blurred regulatory boundaries. A single transaction may involve multiple jurisdictions or create regulatory vacuums due to enforcement difficulties, leaving practitioners struggling to survive in the gap between compliance overload and regulatory absence.

3. Operational and Risk Control Level: The Challenge of Second-Level Decisions and Irreversible Settlement

The "transaction equals settlement" nature of Web3 compresses risk control response time to an extreme. Acquirers must complete risk assessment in an instant, caught in the dilemma of "falsely blocking legitimate users" versus "releasing illegal funds."

Coupled with the industry's general reliance on lagging black-box risk models and the lack of a unified definition for "suspicious transactions," risk judgment standards vary. And once a transaction is confirmed, the funds are permanently lost due to irreversibility.

4. International Collaboration Level: The Disconnect Between Globalized Transactions and Fragmented Regulation

Web3 acquiring can be completed within minutes, while cross-border judicial assistance and regulatory responses often take months. This efficiency disparity encourages some institutions to use offshore lax licenses to undertake high-risk business at the lowest cost, forming a vicious cycle of "bad money driving out good."

Simultaneously, there is an inherent conflict between the public nature of on-chain data and the privacy protection regulations governing off-chain identity information, further exacerbating the lag in regulatory enforcement.

Future Path Construction: Designing a Systematic Compliance Framework
AML for Web3 cross-border acquiring is an interlinked systematic project involving multiple dimensions such as technology, law, risk control, and international collaboration. The main contradictions are reflected in:

• Technological decentralization leads to the absence of legal responsible entities;

• Vague legal provisions make it difficult to preposition risk control measures;

• Differing regulatory standards across countries ultimately weaken overall enforcement effectiveness.

These aspects create a domino-like chain effect. Therefore, acquiring service providers can no longer focus on localized optimization but must build a systematic compliance framework, erecting a stable bridge between the technological reality of "decentralization" and the regulatory requirements of "centralization."

Conclusion

"Anti-money laundering" should not be seen as restrictive rules that bind innovation but understood as an important opportunity to rebuild the trust system. When funds can easily flow across borders, when smart contracts gradually replace traditional banking functions, and when algorithms automatically execute transaction instructions, the ultimate competition between enterprises will no longer be confined to the contest of efficiency alone but will also be a contest of trust value.

For payment service providers, investing resources to build a comprehensive compliance system is not only a necessary security measure but also a strategic choice to build core competitive advantages. By proactively and clearly demonstrating the standardization and transparency of their business to regulators, partners, users, and investors, enterprises can transform compliance investments, originally seen as costs, into valuable trust capital. In this profound transformation, those enterprises that first establish a reliable trust system will occupy a leading position in the new round of financial paradigm evolution.