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Service: Regulatory Compliance Engine ​

The Regulatory Compliance Engine coordinates Investor verification, fund eligibility rules, and on-chain transfer restrictions. It stores compliance results and exposes them to the services that decide whether an Investor can proceed.

The engine provides:

  • Verification: Runs KYC/AML, accreditation (including 506(c) checks), and suitability workflows and stores results for permitted reuse.

  • Rule Enforcement: Applies configured investment limits, transfer restrictions, lock-ups, and geographic constraints during onboarding, investment, and transfer checks.

  • On-Chain Allow-Lists: Manages the off-chain verification data used to update allow-lists for permissioned tokens such as EIP-3643 contracts.

  • Audit Records: Records compliance actions, statuses, attestations, and their source evidence.

  • Jurisdiction Rules: Stores jurisdiction-specific rules as configuration so they can be updated when requirements change.

Core Technical Components & APIs ​

The engine supplies compliance decisions at defined points in the fund and Investment workflows.

Primary Models:

  • Profile Model: The central record where compliance statuses (KYC, Accreditation, MiFID II category, Sophistication) are stored and managed by this engine.

  • Fund Model: The source of truth for the regulation_type and specific compliance requirements of a fund.

  • Investment Model: The engine acts as a gatekeeper before an Investment can be created or legally confirmed.

  • EVM Contract Model: Used to manage the allow-list of verified Crypto Wallets for permissioned tokens.

Governing Logic:

Primary APIs:

  • profile-api: Exposed by this engine to allow other services (like Investment Process Management) to request eligibility checks or trigger verification workflows for the profile.

  • Fund data: Called by the engine to retrieve the specific compliance requirements (like regulation_type or required accreditation level) defined for a particular Fund.

  • evm-api: Called by the engine to add or remove investor Crypto Wallet addresses from the on-chain allow-list managed by the relevant EVM Contract.

  • Consumed APIs: KYC Provider API (Plaid), Accreditation Provider API (North Capital)

Process Lifecycle ​

The engine checks compliance at the workflow points below.

Phase 1: Investor Onboarding & Verification ​

Establishes and maintains the compliance status of each investor Profile.

  • KYC/AML Workflow: Requests identity verification from integrated providers, including document checks, liveness detection, and AML/sanctions screening. It manages status updates, retries, and document requests.

  • Multi-Method Accreditation Verification:

    • Manages rigorous verification for Reg D 506(c), including secure document collection (tax returns, CPA letters) and integration with verification providers.

    • Facilitates self-certification via questionnaires for Reg D 506(b) accredited investors.

    • Handles status expirations and triggers renewal workflows.

  • Suitability & Sophistication Assessment: Presents and processes questionnaires to:

    • Determine MiFID II categorization (Retail/Professional) for EU investors.

    • Assess sophistication for non-accredited investors accessing certain funds (e.g., Reg D 506b).

    • Collect necessary data for Reg CF/A+ investment limit calculations (income, net worth).

  • Investment Limit Calculation & Tracking: Automatically calculates and stores applicable investment limits (e.g., per-fund for Reg A T2, rolling 12-month for Reg CF) on the Profile.

  • "Compliance Passport" Management: Stores verified statuses for reuse across eligible funds where regulations permit.

  • Consent Management: Manages and logs investor consent for data processing (e.g., GDPR) and risk acknowledgments.

Phase 2: Fund Compliance Configuration & Issuer Checks ​

Checks the fund's configured compliance requirements.

  • Rule Association: Allows administrators (via the Issuer Portal) to associate specific compliance requirements (regulation type, accreditation needs, geographic restrictions) with each Fund.

  • Issuer "Bad Actor" Checks: Integrates checks (potentially manual or via API) to ensure issuers and their principals are not disqualified under securities regulations before a Fund can be published.

Phase 3: Pre-Investment Eligibility Checks ​

This phase occurs every time an investor attempts to view or invest in a specific fund.

  • Fund Access Control: Checks if the investor's status permits viewing the specific Fund (e.g., restricting Reg D 506b visibility).

  • Investment Limit Enforcement: Blocks Investment creation if the amount exceeds the investor's calculated limit for Reg A T2 or Reg CF.

  • Investment Eligibility Validation: Before an Investment record is created, it performs real-time checks:

    • Confirms kyc_status is approved.

    • Confirms accreditation_status meets the Fund's requirement (Verified, Self-Certified, or not required).

    • Confirms the proposed investment amount is within calculated limits (for Reg A T2, Reg CF).

    • Confirms MiFID II appropriateness checks/warnings are completed if required.

  • Result: Provides a clear "Go / No-Go" decision to the Investment Process Management engine.

Phase 4: On-Chain Compliance Support ​

While the smart contract enforces on-chain rules, this engine manages the off-chain data that enables it.

  • Allow-List Management: Maintains the registry of verified Crypto Wallet addresses that are permitted to hold specific permissioned tokens (like EIP-3643). Updates are pushed via the evm-api.

  • Transfer Restriction Enforcement (Off-Chain Check): Before initiating an on-chain transfer (via the evm-api), verifies:

    • The token is outside its mandatory lock-up period. (The smart contract reads or enforces this).

    • Both sender and receiver Crypto Wallets are allow-listed for the specific EVM Contract.

Phase 5: On-Chain Compliance Enablement ​

Manages the off-chain data that allows smart contracts to enforce rules.

  • Allow-List Synchronization: Securely calls the evm-api to add verified Crypto Wallet addresses to the appropriate on-chain allow-lists maintained by permissioned token contracts (e.g., EIP-3643). Manages removal if compliance status changes.

Phase 6: Audit & Reporting Support ​

Maintains records for regulatory purposes.

  • Compliance History: Records verification attempts, status changes, attestations, limit calculations, and enforcement decisions.

  • Data Provision for Reporting: Provides access to compliance data needed for generating regulatory filings (e.g., Form C/D reports, investor lists).

Exceptions and Recovery ​

  • Status Expiration Handling: The engine includes logic to automatically transition Accreditation Status to EXPIRED and trigger notifications for renewal.

  • Webhook Processing & Error Handling: Reliably processes asynchronous updates from third-party verification providers, with mechanisms to handle failures or delays.

  • Manual Overrides & Auditing: Lets authorized personnel review or override compliance statuses through the applicable administration surface and records those actions.

  • Handling Evolving Regulations: The rules engine is designed modularly to allow for updates and additions as securities laws change across jurisdictions.

  • Cross-Border Complexity: Includes logic to apply the correct set of compliance checks based on investor residency and fund jurisdiction.

  • Provider Error Handling: Manages errors, retries, and asynchronous webhook responses from third-party verification providers.

Associated End-to-End Workflows ​