Privacy-Preserving Compliance

Compliance on Merces is a set of primitives that let regulated entities enforce KYC, AML, sanctions screening, and Travel Rule obligations without exposing plaintext user data, not to the application, not to a third-party screening engine, and not to TACEO. Compliance is built into the payment flow at the protocol layer, not bolted on as a separate surveillance system.

Compliance is the wedge, not the tax

Private payments cannot scale in regulated jurisdictions without compliance. The standard answer (run KYC and monitoring on plaintext, ship PII to third-party screening engines, and log everything) is fundamentally incompatible with privacy. Privacy-preserving compliance is what makes private rails shippable in regulated markets at all.

The core mechanism: selective disclosure via MPC

By default, every Merces transaction is encrypted. The TACEO Network maintains the transaction graph in encrypted form; only the parties involved in a transfer see its full details. No plaintext sits anywhere in the system.

When an authorized party (a regulator, compliance team, or other entity with reveal rights) submits a decryption request for a specific account, the MPC network nodes jointly approve and perform the decryption. The result is the transaction history for that account, returned in plaintext. Decryption requests are scoped: they expose the selected data and nothing else.

This same pattern underlies every Merces compliance primitive. An application or policy authority queries the TACEO Network about a user, and the network returns a verifiable answer without disclosing the underlying data. Sanctions screens, allowlist checks, and AML audits all share this shape.

ZK-only approaches give you selective disclosure but struggle with persistent identity state, auditability, and lawful disclosure paths. MPC adds the missing pieces: stateful attestations, multi-party authorization for reveals, and the ability to enforce policies that depend on data the user themselves doesn't hold.

Public testnet vs. production

On the public Plasma testnet demo, anyone can try the decryption flow. In production deployments, access is restricted to explicitly authorized entities by policy and contract configuration.

Compliance primitives

Primitive	What it does	Status
Selective disclosure (decryption requests)	Authorized parties submit decryption requests for a specific account. MPC nodes jointly approve and decrypt, returning that account's transaction history in plaintext. Same flow used for AML audits and lawful disclosure.	Live on Plasma testnet (compliance dashboard)
Wallet registration and blocklist	Wallets must be registered in the Merces contract before transacting. Optional KYC or policy checks can be enforced at registration. Registered wallets can later be restricted or added to a blocklist by the administrator, blocking transfers to or from those accounts.	Live on Plasma testnet
Programmable reveal rules	Per-token or per-jurisdiction policies defining who can decrypt what, under which conditions	In active design
Proof-of-compliance bundles	Composable attestations a user can present (e.g. "KYC'd by issuer X, not on list Y, under threshold Z")	In active design
MPKYC	MPC-based KYC: licensed providers attest to a user once; downstream apps query the attestation without seeing the underlying PII	Design / proposal stage
Travel Rule selective disclosure	VASP-to-VASP information exchange that satisfies FATF Travel Rule without putting counterparty data on a public ledger	Design / proposal stage

TACEO doesn't replace KYC. It makes KYC privacy-preserving.

The compliance decision still belongs to a licensed provider, a KYC vendor, a screening engine, a VASP's compliance team. What changes is where the plaintext lives and who sees it.

In the standard model, every application that needs a compliance signal pulls the user's full identity profile, hands it to a third-party API, and stores the result in a database. Each new integration is another copy of the user's data and another surveillance vector.

In the Merces model, the licensed provider attests to a property of the user once, into the TACEO Network. Downstream applications query the attestation and receive a verifiable yes/no, no data shared, no copies created, no per-integration breach surface.

The identity proof point

The MPC architecture that powers Merces compliance is built on the same cryptographic foundation TACEO co-architected for World's iris-code system, deployed in production at global scale as a GDPR regulatory remediation for biometric data. The protocol underneath Merces compliance is the same kind of system, applied to financial flows.

Who it's for

Audience	How they use it
Fintechs and stablecoin issuers integrating Merces	Compliance is built into the payment flow they're already shipping
VASPs and regulated entities	Satisfy AML, KYC, sanctions, and Travel Rule obligations on private rails without standing up surveillance infrastructure
Licensed KYC and screening providers	Issue privacy-preserving attestations on top of existing diligence work, expanding their reach without expanding their data exposure
Compliance and policy teams	Auditable, scoped lawful disclosure paths that don't require the application to hold plaintext

Status

Compliance primitives sit at mixed maturity:

• Selective disclosure is live on Plasma testnet, exposed through the compliance dashboard at merces.taceo.io/compliance. MPC nodes jointly approve and perform the decryption when an authorized party submits a request. AML audits run through this same flow.
• Wallet registration and blocklisting are live on Plasma. Wallets must be registered in the Merces contract before transacting; the administrator can restrict or blocklist registered wallets. Optional KYC or policy checks can be wired in at the registration step.
• Programmable reveal rules and proof-of-compliance bundles are in active design, shaped by ongoing work with regulated partners.
• MPKYC and Travel Rule selective disclosure are at design / proposal stage. The use cases are defined; the implementations are being worked through.
• The cryptographic foundation TACEO co-architected is in production at global scale via World's iris-code deployment.

The product framing, privacy and compliance can coexist with no trade-off needed, is the position we are taking publicly and shipping toward.

Going deeper

Goal	Start here
Try the compliance dashboard	merces.taceo.io/compliance
Understand the underlying transfer protocol	How it works
Talk through a regulated deployment	Email the team