vaquarkhan Compliance & AML
When to Use
- Screening wallet addresses against sanctions lists
- Implementing Travel Rule for VASP transfers
- Assessing MiCA token classification (ART, EMT, other crypto-assets)
- Tax reporting (IRS 1099-DA, cost basis)
- Evaluating whether a token passes the Howey test
Prerequisites
- MCP:
compliance-screening-server(required for all outbound transfers) - Knowledge base:
knowledge-base/regulations/
Jurisdiction Coverage
| Jurisdiction | Regulations |
|---|---|
| EU | MiCA, Travel Rule (TFR), DORA, AMLD6 |
| US | SEC Howey, FinCEN BSA, IRS 1099-DA |
| UK | FCA crypto registration, financial promotions |
| Singapore | MAS Payment Services Act |
| Japan | FSA exchange registration, stablecoin rules |
| UAE | VARA (Dubai), ADGM |
| Global | FATF Travel Rule, risk-based approach |
Workflow
1. Sanctions Screening
Required before every transfer to an external address:
- Call
compliance-screening-server→screen_address - Check OFAC SDN, EU consolidated list, UN sanctions
- BLOCK if match score > threshold
- Log screening result with timestamp and case ID
2. Travel Rule (FATF R.16)
For VASP-to-VASP transfers > jurisdiction threshold:
- Identify beneficiary VASP
- Exchange originator info (name, account, address) via TRP (Travel Rule Protocol)
- Verify beneficiary before releasing funds
- Retain records ≥ 5 years
3. MiCA Classification
| Category | Criteria | Requirements |
|---|---|---|
| EMT | Single fiat-pegged stablecoin | Reserve backing, redemption |
| ART | Multi-asset or algo stable | Stricter reserve rules |
| Other crypto-asset | Default | Whitepaper, CASP authorization |
| Utility token | Access to good/service | Exempt if no investment expectation |
4. Howey Test (US)
Four prongs — investment contract if ALL met:
- Investment of money
- Common enterprise
- Expectation of profits
- Derived from efforts of others
Document analysis for any token launch or marketing in US.
5. Tax Reporting
- Track cost basis (FIFO default; specific ID if elected)
- Report disposals on Form 8949 / 1099-DA (2025+)
- Flag staking rewards as income at FMV on receipt
Hard Rules
- Never bypass sanctions screening
- Escalate PEP (Politically Exposed Person) matches
- Require enhanced due diligence for transactions > $3,000 (FinCEN)
References
knowledge-base/regulations/mica/knowledge-base/regulations/travel-rule/knowledge-base/regulations/fatf/knowledge-base/regulations/sec-howey/