Regulatory Compliance Adaptation Model for Cross-Border Payment Product Redesign

Cross-border payment systems face increasing scrutiny from regulators due to heightened concerns around anti-money laundering (AML), counter-terrorism financing (CTF), and financial transparency. Simultaneously, financial institutions are exploring product redesigns to enhance efficiency, reduce settlement delays, and improve customer experience. This study presents a Regulatory Compliance Adaptation Model for cross-border payment product redesign, integrating regulatory requirements, operational processes, and technological innovations to support compliant and resilient international payment infrastructures. The proposed model emphasizes alignment with existing regulatory frameworks, including AML/KYC obligations, transaction reporting mandates, and central bank settlement guidelines. It incorporates mechanisms for real-time monitoring of compliance metrics and automated verification of counterparty information, ensuring that redesigned products adhere to both domestic and cross-jurisdictional regulations. By embedding compliance checks directly into transaction workflows, the model enables proactive identification of regulatory breaches, reducing operational risk and supporting auditability. A key feature of the model is the integration of digital ledger technology and smart contracts to enhance transparency, traceability, and automation. Smart contracts enforce transaction rules while maintaining immutable records accessible to regulators, facilitating audit and reporting functions. Additionally, the model supports cross-border interoperability, enabling multi-currency settlements, tokenized assets, and standardized messaging formats for seamless international transactions. The framework also addresses organizational adaptation, including staff training, policy revisions, and stakeholder engagement, to ensure that operational processes align with regulatory expectations and technological capabilities. By combining technological innovation with structured compliance mechanisms, the model provides a scalable approach to redesigning cross-border payment products while maintaining regulatory integrity. Overall, the Regulatory Compliance Adaptation Model offers a comprehensive pathway for financial institutions to modernize cross-border payment offerings, mitigate regulatory and operational risks, and enhance transparency and efficiency. It demonstrates the feasibility of embedding compliance at the core of product design, supporting resilient, auditable, and future-ready international payment infrastructures.