Sanctions & KYT

Silo enforces compliance checks at multiple points in the transaction lifecycle. These checks are designed to prevent the platform from being used to facilitate payments involving sanctioned entities, high-risk addresses, or illicit fund flows, while preserving the privacy and usability of the platform for legitimate users. Compliance screening is not optional and cannot be bypassed by any tier. It applies equally to Personal, Plus, and Business accounts.

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Sanctions Screening

Silo screens against sanctions lists at two points: at onboarding (when a user creates an account) and at transaction time (before a payment is facilitated). At onboarding, Silo checks the user’s identity information and wallet address(es) against applicable sanctions lists. Users who are sanctioned persons, who register from sanctioned jurisdictions, or who connect sanctioned wallet addresses are blocked from using the platform. At transaction time, Silo screens the payment before facilitating it. This includes checking the sender’s address, the receiver’s address, and the jurisdictions involved. If any element of the transaction matches a sanctioned entity or jurisdiction, Silo refuses to facilitate the payment. Silo does not serve sanctioned persons, addresses, or jurisdictions. This is enforced programmatically, not by user trust.

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KYT (Know Your Transaction)

KYT is real-time transaction risk monitoring. While sanctions screening checks identities and addresses against static lists, KYT analyzes the transaction itself for risk signals: patterns, source of funds indicators, and behavioral flags that may suggest illicit activity. Silo applies KYT checks to all transactions across all tiers. This includes checks on deposit routes (where the sender’s funds are coming from) and withdrawal routes (where the receiver’s funds are going). KYT is applied regardless of whether the user has completed KYC. Transaction screening is provided by two independent blockchain intelligence providers: TRM Labs and CipherOwl. Silo runs dual providers deliberately. If one provider is unavailable, screening continues through the other, ensuring that every payment is screened before it is facilitated.

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What Happens When a Payment Fails Screening

If a payment fails sanctions screening or KYT checks, Silo refuses to facilitate the transaction. The payment is not routed, no funds enter the vault, and no Payment Instruction is created. Silo’s ability to block transactions is limited to the facilitation stage: the point before funds are deposited into the shared vault. Once funds are in the vault, withdrawals are governed by the smart contract and require the receiver’s wallet signature. Silo cannot seize, redirect, or freeze funds that are already in the vault. This is a deliberate architectural boundary: Silo’s compliance lever is gating (refusing to facilitate), not fund control.

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Tier-Based Controls

In addition to sanctions screening and KYT, Silo enforces tier-based velocity limits as a compliance control. Each tier has daily and monthly transaction caps (see Three-Tier System). Users who reach their tier limits are prompted to upgrade to a higher tier with additional verification. These limits serve a dual purpose. They reduce the platform’s exposure to unverified high-volume activity, and they create a natural incentive for users to complete identity verification in exchange for higher limits and lower fees.

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Identity Verification

KYC (for Plus accounts) and KYB (for Business accounts) are handled by Sumsub, an established identity verification provider. Silo does not build or maintain its own identity verification infrastructure. Verification requirements by tier are detailed on the Three-Tier System page.

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Why This Matters

The absence of compliance controls is what led to Tornado Cash being sanctioned by OFAC. Silo’s compliance architecture is designed to position the platform on the opposite side of that line. Privacy from the public is a feature. Evasion of sanctions and money laundering controls is not. By enforcing screening before facilitation, maintaining encrypted audit trails behind every transaction, and using tiered verification to gate volume, Silo is designed to make misuse difficult while keeping legitimate private payments simple.