Blockchain Blacklist Anti-Money Laundering System

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Solution Overview

Problem

Financial institutions using blockchain and distributed ledger technologies face risks of violating Anti-Money Laundering regulations and reputational damage due to inability to prevent sanctioned entities from participating in transactions, as existing systems lack an automated method to check the sanction status of entities before engaging in business activities.

Innovation Solution

Implementing a system that maintains a sanctioned entity blacklist, which checks digital certificates against this list to determine if an entity is prohibited from transacting, thereby preventing transactions with sanctioned entities by generating an error condition if the entity is found on the blacklist.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Productivity

If blockchain and distributed ledger technologies are used for transactions, then transaction efficiency and decentralization are improved, but the ability to prevent sanctioned entities from participating in transactions deteriorates

Engineering Contradiction:

Improvetransaction efficiencyVSAvoidcompliance with Anti-Money Laundering regulations

Core Design Contradiction:

ProductivityVSReliability

Solution Approach 1:

The system performs preliminary checks by maintaining a sanctioned entity blacklist and checking digital certificates against this list before transactions are finalized. The certificate path validation process includes checking whether any certificate in the chain belongs to a sanctioned entity, preventing transactions with blacklisted parties before they can occur on the blockchain.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The patent introduces an intermediary validation layer between the blockchain transaction system and sanctioned entity lists. This intermediary system performs certificate path validation and checks against blacklists, acting as a mediator that ensures compliance without disrupting the underlying blockchain transaction efficiency.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Measurement precision

If manual checking of sanction status is performed, then compliance accuracy is improved, but processing time and operational complexity increase

Engineering Contradiction:

Improvesanction status verification accuracyVSAvoidtransaction processing time

Core Design Contradiction:

Measurement precisionVSLoss of time

Solution Approach 1:

The system implements automated self-service validation where the certificate path validation process automatically checks against sanctioned entity blacklists without requiring manual intervention. The system autonomously determines whether certificates belong to sanctioned entities and generates appropriate error conditions, eliminating the need for manual sanction status verification.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The patent replaces manual mechanical checking processes with automated electronic validation systems. The certificate path validation mechanism automatically queries sanctioned entity lists and performs compliance checks through digital certificate verification, substituting human-operated manual processes with automated computational validation.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

3Reliability

If certificate path validation is performed, then digital certificate authenticity is improved, but the system cannot detect sanctioned entity status

Engineering Contradiction:

Improvecertificate authenticityVSAvoidsanction status detection capability

Core Design Contradiction:

ReliabilityVSAdaptability or versatility

Solution Approach 1:

The patent extends the certificate path validation process to serve multiple functions: verifying certificate authenticity and detecting sanctioned entity status. The same validation mechanism that checks certificate chains is enhanced to also query sanctioned entity blacklists, allowing a single process to perform both authentication and compliance verification.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Solution Approach 2:

The patent merges the certificate path validation process with the sanction status checking process. By combining these two previously separate functions into a unified validation workflow, the system simultaneously verifies certificate authenticity and detects whether entities are sanctioned, eliminating the need for separate validation steps.

Inventive Principle:

Principle #5Merging (Combining)

Data Source

PatentUS11783342B1Blockchain blacklist anti-money laundering system (BBAMLS)

Publication Date: 2023.10.10 WELLS FARGO BANK NA

AI summary

A system and method for checking the sanction status of an entity to determine whether the entity is prohibited from engaging in transactions with an organization. The system and method include receiving a request to form an agreement between an organization and an entity and maintaining, in a sanctioned entity blacklist, associations between a plurality of entities and a plurality of identifiers. Each identifier of the plurality of identifiers indicates that a respective entity of the plurality of entities has sanctioned entity status prohibiting the respective entity from engaging in a transaction with one or more organizations. The system and method include determining a sanctioned entity status associated with the entity based on a digital certificate and the sanctioned entity blacklist. The system and method include generating, responsive to determining the sanctioned entity status associated with the entity, an error condition indicating that the digital certificate failed validation.