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explorer-monorepo/docs/specs/banking/identity-compliance.md

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# Identity & Compliance Specification
## Overview
This document specifies the identity verification (KYC/KYB) and compliance orchestration system for banking features.
## KYC/KYB Workflow Orchestration
### Workflow Stages
**1. Initial Registration**:
- User registration
- Basic information collection
- Terms acceptance
**2. Identity Verification**:
- Document upload (ID, proof of address)
- Biometric verification (if required)
- Liveness check
**3. Risk Assessment**:
- Sanctions screening
- PEP screening
- Risk scoring
**4. Approval/Rejection**:
- Automated approval (low risk)
- Manual review (medium/high risk)
- Rejection with reasons
### Workflow State Machine
```
[Registered] → [Identity Verification] → [Risk Assessment] → [Approved/Rejected]
[Manual Review]
```
## Sanctions/PEP Screening Integration
### Screening Providers
**Options**:
- WorldCheck
- Dow Jones Risk & Compliance
- Chainalysis
- Others
### Screening Process
**1. Data Collection**:
- Name, date of birth, nationality
- Address information
- Associated addresses (blockchain addresses)
**2. Screening Check**:
- Sanctions lists (OFAC, UN, EU, etc.)
- PEP lists (politically exposed persons)
- Adverse media screening
**3. Match Resolution**:
- Automated false positive filtering
- Manual review for potential matches
- Risk scoring based on match confidence
### Screening Result
```json
{
"user_id": "uuid",
"screening_status": "cleared",
"matches": [],
"risk_score": 0.1,
"screened_at": "2024-01-01T00:00:00Z",
"next_screening": "2025-01-01T00:00:00Z"
}
```
## Risk Tier Assignment
### Risk Tiers
**Tier 1 - Low Risk**:
- Verified identity
- No sanctions/PEP matches
- Low transaction volume
- Limits: Standard limits
**Tier 2 - Medium Risk**:
- Verified identity
- Minor concerns (e.g., high-risk country)
- Medium transaction volume
- Limits: Reduced limits, additional monitoring
**Tier 3 - High Risk**:
- Unverified or incomplete verification
- Sanctions/PEP matches
- High transaction volume
- Limits: Very restricted or blocked
### Risk Scoring
**Factors**:
- Identity verification status
- Sanctions/PEP screening results
- Transaction patterns
- Geographic risk
- Source of funds
**Score Range**: 0.0 (low risk) to 1.0 (high risk)
## Limit Management
### Limit Types
**Transaction Limits**:
- Daily transaction limit
- Monthly transaction limit
- Single transaction limit
**Account Limits**:
- Maximum balance
- Withdrawal limits
### Limit Enforcement
**Real-time Checks**:
- Check limits before transaction
- Reject if limit exceeded
- Provide limit status to user
**Dynamic Limits**:
- Adjust limits based on risk tier
- Increase limits with step-up verification
- Temporary limit increases (pending approval)
## Step-Up Verification
### Trigger Conditions
**Triggers**:
- Transaction exceeds current tier limits
- Suspicious activity detected
- User request
- Regulatory requirement
### Verification Levels
**Level 1**: Basic KYC (standard)
**Level 2**: Enhanced due diligence (EDD)
**Level 3**: Institutional/KYB verification
### Step-Up Process
1. Notify user of requirement
2. Collect additional documentation
3. Enhanced screening
4. Review and approval
5. Update risk tier and limits
## Integration Points
### Identity Provider Integration
**Providers**:
- Jumio
- Onfido
- Sumsub
- Others
**Integration Pattern**:
- API integration
- Webhook callbacks for status updates
- Document storage
### Compliance System Integration
**Systems**:
- Transaction monitoring
- Reporting systems
- Audit systems
## Data Privacy
### PII Handling
**Storage**: Encrypted storage
**Access**: Role-based access control
**Retention**: Per regulatory requirements
**Deletion**: Right to deletion support
## References
- Account & Ledger: See `account-ledger.md`
- Compliance Dashboards: See `compliance-dashboards.md`
- Security: See `../security/privacy-controls.md`