Compliance

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KYT and AML screening, audit operations, and travel rule compliance for regulated entities.

Compliance features help you meet regulatory requirements by screening transactions, maintaining audit trails, and supporting travel rule data exchange. This topic explains Chainalysis KYT integration, audit operations, and reporting.

What you need

  • Understanding of /core-concepts/policies
  • A Chainalysis account and API credentials for KYT screening
  • A Notabene integration for travel rule compliance

Components to configure

KYT and AML screening

Screen transactions for potential illicit activity by using the Chainalysis integration.

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Screening capabilities include:
  • Pre screening: Evaluate outbound transactions before execution.
  • Post screening: Analyze incoming transactions after detection.
  • Risk scoring: Retrieve risk levels for addresses and transactions.
  • Policy integration: Block or require approval for flagged transactions.
Audit trails
IBM Digital Asset Haven logs all operations for audit and regulatory reporting.Available audit data includes:
  • Transaction history by wallet
  • API audit logs
  • Policy triggers and approval decisions
  • Webhook event history
Travel rule
For transfers above regulatory thresholds, exchange originator and beneficiary information through the Notabene integration.

KYT policy configuration

Block high risk transactions
Create a policy to block transactions with SEVERE alerts.
  • Rule: Chainalysis transaction pre screening
  • Alert level: SEVERE
  • Action: Block
Require approval for risky transactions
Create a policy that sends transactions to compliance for review.
  • Rule: Chainalysis transaction pre screening
  • Alert levels: SEVERE and HIGH
  • Action: Request approval from compliance team

Alert levels

Chainalysis provides alert levels that indicate risk severity.
Level Meaning Recommended action
SEVERE Strong indicators of illicit activity Block or escalate immediately
HIGH Significant risk indicators Require compliance approval
MEDIUM Moderate risk indicators Flag for review
LOW Minor risk indicators Monitor
Screening flow

Compliance workflows

Reviewing flagged transactions
When a transaction is flagged:
  1. The compliance team receives a notification.
  2. Review transaction details and Chainalysis risk data.
  3. Approve or reject the transaction.
  4. Document the decision and rationale for audit purposes.
Webhook notifications
Configure webhooks for compliance related events.
  • policy.approval.pending: Approval required
  • policy.triggered: A policy event occurred

Audit reporting

Transaction reports
Export transaction data for auditors.
  1. Go to wallet history in the dashboard.
  2. Filter by date range, direction, or status.
  3. Export data to CSV.
Auditor access
Create a read only permission set for external auditors.
  • View wallets, transactions, and transfers
  • View policies and approval history
  • View audit logs
  • No ability to create, modify, or approve

Best practices

Regular policy review
  • Review alert thresholds quarterly.
  • Adjust based on false positive and false negative rates.
  • Update policies as Chainalysis categories evolve.
Documentation
  • Document your AML and KYT program.
  • Record the rationale for specific thresholds.
  • Maintain a record of approval decisions.
Signed action verification
All actions in IBM Digital Asset Haven are cryptographically signed by the initiator, which provides:
  • Non repudiation: Users cannot deny performing actions.
  • Integrity: Actions cannot be modified after signing.
  • Attribution: Every action is tied to a specific credential.