Money laundering in a blockchain-based ecosystem: challenges, regulatory approaches and future perspectives

This study explores the phenomenon of money laundering (AML) and countering the financing of terrorism (CFT), focusing on the impact of Distributed Ledger Technology (DLT) on legal categories, paradigms and factual connections. The research is driven by a twofold reasoning: first, the intrinsic complexity of money laundering as a multi-disciplinary legal challenge; and second, the profound evolution the legal system is undergoing facing new blockchain-based systems. By adopting a systemic and critical approach, the aim is to analyze the interaction between traditional regulatory frameworks and decentralized ecosystems. The research traces the historical development of the AML/CFT framework, identifying the milestones and legislative rationales that led to the inclusion of virtual currencies and DLT under its scope. It then investigates how evolving market structures influence the commitment of money laundering, assessing whether new market paradigms can effectively address the risks posed by alternative financial systems. A significant portion of the analysis is dedicated to the legal concept of digitised value, investigating whether current definitions are sufficient to cover the circulation of assets within DLT systems and identifying the critical entrance points for fund availability.the one of the critical points is the evaluation of the role of intermediaries, questioning whether the current definition of "obliged entities" remains coherent in a DLT scenario. This includes an analysis of the touchpoints between traditional finance and blockchains, specifically comparing the role of digital wallets to traditional intermediaries and questioning the efficacy of current regulatory framework. After providing an overall analysis of the axes around which the current AML/CFT regulatory framework is shaped, the study presents the changes that would arise in a blockchain-based scenario. The core components are then discussed to propose a new approach for future regulatory strategies.