CHLOM License Exchange (LEX) — Compliance & Regulatory Integration Module Specification (Phase 3→4)

Owner: CrownThrive, LLC Date: 2025-08-08 Classification: Internal — Compliance Enforcement, Jurisdiction Mapping, and Policy Integration for Licensed Asset Transactions

1. Purpose

This document defines the architecture, workflows, and governance policies for integrating jurisdiction-specific compliance frameworks into the CHLOM License Exchange. The module ensures all transactions, license transfers, and dispute resolutions adhere to applicable laws, regulations, and industry standards.

2. Core Functions

• Jurisdiction Mapping: Automatically detect applicable legal frameworks based on participant location, asset type, and license scope.
• Policy Engine Integration: Apply rulesets dynamically from DAO-approved policy bundles.
• Real-Time Compliance Checks: Execute automated KYC/AML, sanctions screening, and regulatory audit hooks pre-transaction.
• Cross-Border Licensing: Enable multi-jurisdiction validation for global asset transfers.
• Regulatory Reporting: Generate and submit compliance reports to relevant authorities.

3. Compliance Workflow

1. Pre-Transaction Check: Identify jurisdiction and asset type.
2. Ruleset Loading: Fetch applicable policy bundles from on-chain governance store.
3. Automated Validation: Run KYC, AML, ZKP license authenticity checks.
4. Regulatory Approval: Request human or automated regulator sign-off if required.
5. Transaction Execution: Proceed only if all compliance checks pass.
6. Audit Logging: Store immutable logs for regulatory inspection.

4. Data Structures

• Policy Bundle Record:

{
  "bundle_id": "policy-001",
  "jurisdiction": "US-NY",
  "rules": ["KYC_REQUIRED", "SANCTIONS_CHECK"],
  "version": "1.2.0"
}

• Compliance Report:

{
  "transaction_id": "txn-789",
  "jurisdiction": "EU-DE",
  "checks_passed": true,
  "timestamp": "2025-08-08T14:00:00Z"
}

5. Security & Compliance

• Immutable Audit Trails: All compliance checks hashed and stored on-chain.
• Encrypted Regulatory Data: Only authorized regulators can access full records.
• Policy Version Control: DAO maintains versioned policies with rollback capability.
• ZKP-Enhanced Privacy: Sensitive user data hidden while proving compliance.

6. AI/ML Integration

• Jurisdiction Prediction: ML models predict jurisdiction for assets with ambiguous origins.
• Policy Optimization: AI analyzes enforcement history to refine policies.
• Fraud Detection: Real-time ML checks for anomalies in compliance behavior.

7. Developer Notes

• Languages: Solidity, Rust (Substrate) for on-chain logic; Python for off-chain compliance services.
• Integrations: REST/gRPC for regulator APIs, IPFS/Arweave for storing public compliance proofs.
• Code Example:

function checkCompliance(bytes32 assetId, address participant) public view returns (bool) {
    // Fetch jurisdiction
    string memory jurisdiction = getJurisdiction(assetId, participant);
    // Load policy bundle
    PolicyBundle memory bundle = policies[jurisdiction];
    // Execute checks
    return runComplianceChecks(bundle, participant);
}

This module embeds regulatory adherence directly into the CHLOM License Exchange, enabling global scalability without sacrificing compliance integrity.