KYC / AML Onchain

Infrastructure & Compliance Rails · Lesson 8.3

Know Your Customer (KYC) and Anti-Money Laundering (AML) checks are the identity and source-of-funds work a regulated issuer has to do, and tokenization does not remove them. The investor is verified offchain and linked to an approved wallet. The token contract can then check that approval before a transfer goes through, so a transfer to an unapproved wallet fails. Ongoing AML monitoring, such as sanctions screening and reviews of unusual activity, still happens offchain. The trade-off is that a permissioned token can only move between wallets the issuer has approved.

Wally’s note: no awkward email weeks later. it just fails.

Some compliance checks now run in the token's transfer rules. Identity checks and ongoing monitoring still happen offchain.

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