KYT funds checks: from risk labels to reviewable decisions

KYT means Know Your Transaction. It examines transaction sources, destinations and onchain risk exposure. Its value is to provide verifiable leads that support compliance decisions. A single scan, score or no-hit result is not a guarantee that funds are safe.

This is a workflow framework for authorized businesses. Actual thresholds, reporting obligations, retention and handling permissions depend on the jurisdiction, activity, applicable requirements and professional advice. This website has no live KYT integration and produces no actual address risk findings.

Separate KYC, KYB, KYT and source of funds

KYC establishes an individual’s identity, KYB examines a business and its beneficial owners, and KYT analyzes transactions and onchain exposure. Source-of-funds checks also need evidence such as contracts, bank records and trading history. These checks complement one another. A low onchain risk result does not replace identity, business context or permission to operate.

Where Travel Rule information applies, agree who collects, verifies and securely transmits it. Do not put names, identity documents, residential addresses or other personal information into public-chain memos. The inquiry email on this site is not a channel for submitting complete sensitive customer records.

Address screening and transaction monitoring answer different questions

Screening a destination before delivery checks known labels, relevant exposure and counterparty context. Monitoring an actual incoming transaction examines its source, path, amount and associated order. An address passing a previous check does not establish that every later transfer is acceptable.

For ongoing monitoring, confirm provider support for assets, networks, historical depth, label updates, alert callbacks and case management. Chainalysis KYT is an example product reference. Linking its documentation does not mean this site has purchased, been authorized for or integrated the service.

Start with an asset and network inventory. Unsupported networks, insufficient data and unrecognized assets need explicit holds or human handling. An empty result must not become a green approval.

Interpret risk labels with paths and context

Checks may include potential sanctions matches and exposure to stolen funds, scams or ransomware. Record the label source and time. An indirect link to a service does not establish that a wallet owner participated in that service’s unlawful activity.

Record direct and indirect exposure separately, including amount, proportion, path distance, time, entity attribution and evidence confidence. Sanctions obligations cannot be reduced to a fixed percentage threshold. Authorized staff must resolve potential matches, the scope of relevant lists and applicable rules. Mixers, bridges and exchanges also require understanding of data limitations and the actual transaction context.

Scores and thresholds are not necessarily comparable across providers. A score of 70 does not have one universal meaning, and a score is not a legal finding.

Make triage and approval explainable

At minimum, distinguish these outcomes:

• No current rule hit: preserve the data and screening time, then complete the remaining business, identity and funds checks.
• More evidence needed: unclear sources, third-party payers or indirect exposure may hold delivery and open a review case.
• Severe risk or potential sanctions match: stop automatic processing, escalate to authorized compliance staff and apply restrictions or reporting where required.
• Timeout, failure, missing data or no coverage: keep the outcome pending, query the original result, use bounded retries or seek human review. Never automatically release it.

Rules need documented triggers, grounds, owners and permitted actions. Release requires all relevant checks and approvals. Staff must not turn a pending result into approval just to speed up an order. Exceptions need reasons, authority and evidence; an exception cannot override a legal prohibition.

Place KYT at the right points in each ramp

On-ramp requires fiat payer and source checks, with destination screening before asset delivery. Off-ramp requires analysis of the actual incoming transfer and chain confirmation, with the relevant review completed before fiat payout. Both directions need the actual counterparty, quote and business evidence.

Monitoring may alert after assets have already arrived. Record that as received and pending review; holding the assets does not itself authorize conversion or payout. Returning funds is also an action requiring checks on the original payer relationship, address control, provider rules and applicable obligations. Never assume that an exchange hot wallet accepts direct returns or let a customer nominate an arbitrary new return address.

Changing addresses, splitting orders, crossing chains or switching providers must not be used to bypass triggered checks. Keep customer explanations, onchain paths and handling decisions in the same case record.

Plan for timeouts, callbacks and late labels

Screening requests must remain linked to the business order. Duplicate callbacks must not cause duplicate release or payout. Store the request identifier, screening status, provider reference and update time. Verify ownership and ordering before accepting updates, so older results cannot overwrite newer decisions.

After an API timeout, query the original check and retry within a defined budget. Keep it pending without a conclusive outcome. When processing a backlog after recovery, recheck quotes, addresses, policy and order state rather than replaying every funds instruction.

New labels or late alerts during an ongoing relationship require reassessment, escalation and any necessary restrictions. Preserve later discoveries and handling for completed transactions, too. Do not rewrite original evidence to improve the historical appearance.

Make the record understandable to a second reviewer

A screening record can include customer and order links, asset and network, addresses and hash, amount, screening time, provider and data version, policy version, exposure evidence, trigger reasons, requested documents, reviewers, approvers, final actions and later reassessments.

Retain enough evidence for review while minimizing personal information, restricting access and setting retention under applicable requirements. Redact exports. Do not store seed phrases, private keys or unrelated banking documents. Third-party API logs must not expose API secrets or complete personal records.

Acceptance needs more than a successful API response. Cover no-hit results, false matches, direct and indirect exposure, unsupported networks, timeouts, duplicate callbacks, stale results, human rejection, unauthorized approvals and reassessment after new evidence. Record the triggered rule, the responsible action and why an order remains pending.

Explore the KYT workflow, or discuss coverage, providers and acceptance conditions through the KYT funds compliance service.