Detailed Instructions

Begin by conducting a regulatory mapping exercise. This involves identifying all jurisdictions where your aggregator has users, liquidity providers, or node operators. For each jurisdiction, document the relevant financial regulations, such as the EU's Markets in Crypto-Assets (MiCA) regulation, the US Bank Secrecy Act (BSA) and state-level money transmitter licenses, or the UK's Financial Conduct Authority (FCA) cryptoasset regime.

• Sub-step 1: Catalog user IP addresses and wallet registration data to determine geographic distribution.
• Sub-step 2: Consult with legal counsel to interpret how VASP (Virtual Asset Service Provider) definitions apply to your aggregator's specific functions, like order routing or smart contract interactions.
• Sub-step 3: Create a compliance matrix linking each jurisdiction's key requirements (e.g., KYC, transaction reporting, capital reserves) to your platform's features.

Tip: Regulatory landscapes are fluid. Establish a process for monitoring regulatory announcements from bodies like the Financial Action Task Force (FATF) for updates to the Travel Rule.

Detailed Instructions

Design a risk-based approach to Know Your Customer (KYC) and Anti-Money Laundering (AML). Not all interactions require the same level of scrutiny. For instance, viewing aggregated rates may be permissionless, while executing large swaps or providing liquidity could trigger verification.

• Sub-step 1: Integrate a specialized KYC provider API (e.g., Sumsub, Jumio) to verify government IDs and perform liveness checks for high-risk tiers.
• Sub-step 2: Implement on-chain analytics using services like Chainalysis or TRM Labs to screen wallet addresses for connections to sanctioned entities or high-risk protocols before processing transactions.
• Sub-step 3: Develop a smart contract or off-chain database to map verified identities to specific wallet addresses, ensuring this sensitive data is stored securely and access-controlled.

solidityCopy
// Example of a simple registry contract storing a hash of a verified user's ID linked to an address
mapping(address => bytes32) private _kycHashes;

function setKycHash(bytes32 hashedKycData) external {
    require(msg.sender == kycManager, "Unauthorized");
    _kycHashes[tx.origin] = hashedKycData; // Using tx.origin cautiously for demonstration
}

Tip: Consider privacy-preserving techniques like zero-knowledge proofs for future-proofing, allowing users to prove compliance without revealing raw identity data on-chain.

Detailed Instructions

Compliance must be proactive, not retrospective. Implement a transaction monitoring system that evaluates swap parameters, destination addresses, and asset types against your risk policies before the user signs the transaction.

• Sub-step 1: Integrate a real-time sanctions screening API. Before quoting a price or constructing a swap calldata, screen the user's msg.sender address and any destination address (e.g., a withdrawal address) against OFAC and other sanctions lists.
• Sub-step 2: Define and codify risk rules. For example, block transactions over a certain value threshold (e.g., $10,000) from unverified wallets, or flag swaps involving privacy coins like Monero or Zcash for manual review.
• Sub-step 3: Build an alerting and case management dashboard for your compliance officers to review flagged transactions, with the ability to whitelist false positives or blacklist malicious addresses.

Tip: Your monitoring logic should be applied at the quote generation stage in your aggregator's backend, preventing the presentation of a viable route for a non-compliant transaction.

Detailed Instructions

Regulators require the maintenance of audit trails. Your framework must log all critical actions, from user registration and KYC status changes to every transaction quote and execution. These records are essential for Suspicious Activity Reports (SARs) and responding to regulatory inquiries.

• Sub-step 1: Design a secure, immutable logging system. Store hashes of transaction details (user address, timestamp, source/destination chain, asset amounts, involved protocols) in a tamper-evident database or on a low-cost blockchain like Polygon or an L2.
• Sub-step 2: Automate the generation of reports. For jurisdictions requiring it, implement logic to compile and format data for periodic reporting, such as the Travel Rule which requires sending originator and beneficiary information for transfers over a certain threshold.
• Sub-step 3: Define data retention policies aligned with regulations (often 5-7 years) and ensure secure, encrypted storage with strict access controls.

javascriptCopy
// Example log entry structure for an aggregated swap
const complianceLogEntry = {
  timestamp: Date.now(),
  userAddress: '0x1234...',
  kycTier: 2,
  inputAmount: '1.5',
  inputAsset: 'ETH',
  outputAmount: '4500',
  outputAsset: 'USDC',
  route: ['UniswapV3', '1inch Fusion'],
  txHash: '0xabcde...',
  screenedSanctions: false,
  riskScore: 12
};
// Hash and store this entry

Tip: Use decentralized storage solutions like IPFS or Arweave for long-term, censorship-resistant archiving of compliance logs, storing only the content identifiers (CIDs) in your primary database.

Detailed Instructions

Transparency is a key compliance principle. Users must be informed about what data is collected, how it is used, and under what circumstances their transactions may be restricted. This is often a legal requirement under data protection laws like GDPR.

• Sub-step 1: Draft and publish clear Terms of Service and Privacy Policy documents. Specifically outline your KYC/AML policies, transaction monitoring practices, data sharing protocols with regulators, and user rights regarding their data.
• Sub-step 2: Implement in-app compliance notices. Use modal dialogs or clear banners to inform users when they are approaching a transaction limit that requires verification, or when a specific token pair is unavailable due to regulatory constraints.
• Sub-step 3: Create a user-facing portal where verified users can view their compliance status, submit additional documentation, and access a record of their submitted reports (e.g., tax documents).

Tip: Proactive communication builds trust. Consider publishing a transparency report detailing the number of SARs filed or addresses blocked, demonstrating your commitment to a secure ecosystem.