The Dark Art of Financial Disguise in Web3: Money Laundering Schemes and Countermeasures

• URL: http://arxiv.org/abs/2509.21831v1
• Date: Fri, 26 Sep 2025 03:47:58 GMT
• Title: The Dark Art of Financial Disguise in Web3: Money Laundering Schemes and Countermeasures
• Authors: Hesam Sarkhosh, Uzma Maroof, Diogo Barradas,
• Abstract summary: Survey aims to outline a taxonomy of high-level strategies and underlying mechanisms exploited to facilitate money laundering in Web3.<n>We examine how criminals leverage the pseudonymous nature of Web3, alongside weak regulatory frameworks, to obscure illicit financial activities.
• Score: 3.5661907030808115
• License: http://creativecommons.org/licenses/by/4.0/
• Abstract: The rise of Web3 and Decentralized Finance (DeFi) has enabled borderless access to financial services empowered by smart contracts and blockchain technology. However, the ecosystem's trustless, permissionless, and borderless nature presents substantial regulatory challenges. The absence of centralized oversight and the technical complexity create fertile ground for financial crimes. Among these, money laundering is particularly concerning, as in the event of successful scams, code exploits, and market manipulations, it facilitates covert movement of illicit gains. Beyond this, there is a growing concern that cryptocurrencies can be leveraged to launder proceeds from drug trafficking, or to transfer funds linked to terrorism financing. This survey aims to outline a taxonomy of high-level strategies and underlying mechanisms exploited to facilitate money laundering in Web3. We examine how criminals leverage the pseudonymous nature of Web3, alongside weak regulatory frameworks, to obscure illicit financial activities. Our study seeks to bridge existing knowledge gaps on laundering schemes, identify open challenges in the detection and prevention of such activities, and propose future research directions to foster a more transparent Web3 financial ecosystem -- offering valuable insights for researchers, policymakers, and industry practitioners.

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