[!] ZERO TOLERANCE FOR ILLICIT FINANCE
This Anti-Money Laundering Policy ("AML Policy" or "Policy") sets forth the standards, risk mitigation procedures, and compliance measures implemented by Vellum Cash ("Vellum," "we," "us," or "our") to proactively protect the protocol from being exploited for money laundering, terrorist financing, ransomware extortion laundering, or international sanctions evasion.
While Vellum is engineered as a zero-knowledge settlement protocol, we maintain an uncompromising commitment to financial integrity. We implement automated blockchain intelligence screening to identify and reject transactions originating from known criminal exploits, designated terrorist organizations, or sanctioned entities.
§ 1. Commitment to Financial Integrity & AML Framework
[POSTURE]Vellum is dedicated to defending legitimate decentralized finance while preventing criminal abuse. Our compliance posture adheres to international recommendations issued by the Financial Action Task Force (FATF), the Wolfsberg Group standards, and statutory Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) mandates.
Our team maintains a comprehensive Risk-Based Approach (RBA) designed to dynamically analyze on-chain transaction patterns, calculate exposure risks, and reject illicit conduits before cryptographic commitments are minted.
§ 2. Algorithmic Risk Scoring & Threat Detection
[SYSTEM ARCHITECTURE]The Vellum AML System is an automated intelligence screening pipeline that inspects deposit parameters and relayer ingress requests in real-time across four distinct vectors:
[01] DYNAMIC RISK SCORINGAutomated on-chain clustering algorithms score deposit addresses based on transaction history, cluster proximity, and counterparty risks.
[02] SANCTIONS SCREENINGImmediate, automated blacklisting of wallet addresses published on OFAC, European Union, UN, or UK sanctions lists.
[03] EXPLOIT TRACKINGReal-time integration with global incident trackers identifying stolen funds from DeFi bridge hacks, smart contract exploits, and phishing drains.
[04] VOLUME HEURISTICSAlgorithmic thresholds limit rapid structuring or anomalous high-velocity deposits indicative of smurfing or layering.
§ 3. User Warranties & Lawful Source of Funds
[WARRANTIES]Every user generating an ephemeral conduit or interacting with Vellum contracts expressly warrants and represents that:
- All digital assets utilized in connection with the Services originate from legitimate, lawful commercial, mining, staking, or trading activities.
- You are not a target of economic sanctions, nor are you acting on behalf of or for the benefit of any individual or entity designated on a sanctions blacklist.
- You will not route funds derived from illegal narcotics sales, weapons proliferation, human trafficking, fraud, identity theft, or ransomware extortion.
- You agree that if your deposit triggers critical threat heuristics, Vellum and independent relayers reserve the right to freeze routing and require identity verification prior to settlement.
§ 4. Verification Procedures (KYC & SOF Protocols)
[VERIFICATION PROTOCOL]In cases where an incoming transaction is flagged by algorithmic threat detection or law enforcement alerts, Vellum and designated compliance partners require the following documentation:
4.1 Identity Verification (KYC)A valid, unexpired government-issued passport, national ID card, or driving license, accompanied by a high-resolution biometric facial liveness scan.
4.2 Source of Funds (SOF) / Source of Wealth (SOW)Proof of lawful origin, including exchange withdrawal records, salary slips, certified tax returns, corporate earnings statements, or blockchain transaction ancestry verifying clean provenance.
4.3 Proof of AddressA utility bill or bank statement issued within the last ninety (90) days displaying the user's legal name and physical residential address.
§ 5. Evaluation Outcomes & Conduit Disposition
[DISPOSITION]Following manual review of verification materials by compliance analysts:
[OUTCOME A] POSITIVE EVALUATIONUpon successful verification of clean provenance, the hold is released, and the zero-knowledge settlement proof is permitted to execute to the unlinked destination address.
[OUTCOME B] NEGATIVE EVALUATIONIf documentation is insufficient or fails verification, the transaction is rejected. Funds are returned strictly to the originating deposit address (minus verified network gas fees).
[OUTCOME C] SEVERE VIOLATION / SANCTIONS MATCHIf funds match sanctioned state actors (e.g. Lazarus Group) or confirmed terror financing, the conduit is permanently frozen, and information is reported to relevant Financial Intelligence Units (FIUs).
§ 6. Red Flag Heuristics & Prohibited Activities
[RED FLAGS]The Vellum automated screening pipeline continuously flags anomalous indicators including:
- Deposits originating directly from darknet marketplaces (e.g., Hydra, Bohemia, Mega).
- Transactions routed from ransomware payment clusters (e.g., LockBit, BlackCat, Akira).
- Smart contract addresses flagged as exploit targets, flash-loan attack drains, or bridge drains.
- Transactions originating from sanctioned mixers (e.g., Tornado Cash, Blender.io, Sinbad.io).
- Unusual transaction structuring involving repeated micro-deposits just below reporting limits.
§ 7. Sanctions Compliance & Restricted Targets
[SANCTIONS TARGETS]Vellum strictly enforces international sanctions screening against the following primary lists:
OFAC SDN & NON-SDN
EU CONSOLIDATED
UN SECURITY COUNCIL
UK HM TREASURY (OFSI)
§ 8. Cooperation with Regulatory & Judicial Authorities
[LAW ENFORCEMENT]Vellum cooperates with lawful court orders, subpoenas, and Mutual Legal Assistance Treaties (MLAT) issued by competent judicial authorities. We respond to valid, legally binding inquiries regarding flagged transactions and will provide all available off-chain technical logs to assist in investigating financial crime.
§ 9. Limitation of Protocol Liability
[LIABILITY]Vellum shall not be held liable for any loss of profits, slippage, market depreciation, or indirect damages resulting from transaction holds, delay in proof generation due to compliance evaluations, or rejection of illicit funds in accordance with this Policy.
§ 10. Compliance Contact & Amendments
[COMPLIANCE DESK]For compliance verifications, suspicious activity reports, or law enforcement inquiries, communicate with our dedicated compliance officers:
COMPLIANCE DESK: compliance@vellum.cash[AML / CFT CODEX IN FORCE]