1. High-Level System Interaction

The compliance data cache functions as a hashed verification layer. Counterparties complete AML, KYC, and sanction checks through third-party providers integrated into DeepRUSD’s website. The results are stored on-chain in hashed form to protect privacy. To query the cache, institutions must provide the hashed address they want to verify.

• Address Hashing: Only hashed addresses are stored on-chain, preserving user privacy.
• Cache Query: Institutions submit a hash of an address to determine if AML/KYC data exists.
• Validity Period: AML/KYC results are valid for 1 year unless regulations require more frequent checks.

2. Verification Attributes

Each hashed entry in the compliance cache includes:

• Date of AML/KYC validation.
• Sanction check result.
• Servicer name (third-party provider).
• Country of validation.
• Type of entity: individual, business, government.
• Validation level:
  • ID only
  • ID & residence
  • ID, residence, and financial confirmation

3. Greylist and Blacklist Mapping

The cache includes built-in mechanisms for greylist and blacklist enforcement.

• Greylist:
  • Pre-approved institutions and government entities may submit hashed addresses for temporary restrictions.
  • Entries remain active for 72 hours.
  • During the first 24 hours, the listing entity must provide documentation (court orders, legal notices, evidence of active attacks).
  • If no justification is provided, the entry is removed and a 7-day cooldown applies before the same entity may submit another greylist for that address.
  • If appropriate documentation is provided, the address may be escalated to the blacklist.
• Blacklist:
  • Addresses on the blacklist are permanently restricted from using DeepRUSD services.
  • Blacklist removal requires action by the original listing party or the DeepRUSD board, typically supported by court orders or equivalent legal process.

4. Abuse Prevention

To prevent misuse, all greylist requests are logged. Entities that fail to convert at least 50% of greylists into validated blacklists may face limits or suspension of their greylisting privileges.

5. Institutional Benefits

Institutional partners benefit from real-time, on-chain access to compliance data:

• Risk Mitigation: Institutions can interdict active robberies or similar threats by temporarily freezing accounts via greylist submission.
• Validation: Institutions can query whether DeepRUSD holds AML/KYC data for a potential counterparty, with results provided upon justified request (e.g., supported by a court order).
• Sanction Screening: Institutions can quickly determine on-chain if an address has failed sanction checks, without incurring the cost of running their own screening process.

6. Government and Law Enforcement Benefits

Law enforcement and government agencies benefit from a structured, rapid-response process. Instead of navigating lengthy legal procedures, approved agencies can initiate greylists to temporarily halt activity, then follow up with legal documentation to escalate enforcement. Customers are informed of this process in DeepRUSD’s terms of service and insurance prospectus documents, ensuring transparency.

7. Governance and Oversight

• Compliance Function: DeepRUSD will maintain a compliance function to manage cache operations, with emphasis on outsourcing responsibilities to qualified third parties wherever possible.
• Jurisdictional Alignment: Abandoned property rules and enforcement actions are processed in accordance with the relevant jurisdiction governing each transaction.
• On-Chain Transparency: All greylist and blacklist actions are recorded on-chain for auditability and accountability.

8. Ecosystem Integration

The compliance data cache is the backbone of the DeepRUSD ecosystem, ensuring that all financial activity across our products meets regulatory standards without sacrificing speed or efficiency. AML/KYC validation is enforced transparently at the protocol level.

• Stablecoin (RUSD): Anyone may freely use RUSD as a digital dollar. However, reserve deposits and redemptions require AML/KYC and sanction checks. This ensures compliant entry and exit points into the system while preserving open market utility.
• Insurance Pools: Underwriters and buyers of protection must pass AML/KYC checks before minting or redeeming underwriting tokens (UWT) and premium tokens (PT).
• Credit Facility: Borrowers using UWT as collateral must be verified through the compliance cache, protecting the integrity of loan issuance and repayment.
• Escrow Service: Both Party A and Party B must have valid AML/KYC status before engaging in an escrow agreement, ensuring compliant bilateral trades and settlements.

By embedding AML/KYC verification into every product flow, DeepRUSD provides institutions with the compliance assurances they require to participate at scale, while keeping processes efficient and cost-effective.