Web3 Money Laundering: A Taxonomy of Strategies, Mechanisms, and Countermeasures Background Web3 technologies have not just digitized money; they have fundamentally altered the physics of financial …

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Money laundering in Web3 exploits decentralized systems through six core strategies: transaction flow obfuscation (peeling chains, dusting), commingling funds, chain-hopping across blockchains, disconnected fund flows using privacy coins and zero-knowledge proofs, subjective valuation with NFTs, and regulatory arbitrage. The traditional Placement-Layering-Integration model breaks down in crypto-native crimes where funds start digital. Investigators face three data silos: noisy on-chain data, siloed off-chain KYC records, and cross-chain black holes. Countermeasures include compliance-aware privacy solutions like smart contract blocklists and zero-knowledge compliance proofs that prove non-criminal status without revealing identity.

Web3 Money Laundering: A Taxonomy of Strategies, Mechanisms, and Countermeasures

2) The Taxonomy of Disguise: Six Core Strategies

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3) The Launderer’s Toolkit: Intermediary Mechanisms

4) The Detective’s Problem: The Data Gap