Compliance / KYC

Institutional KYC Integration on Canton

Reusable KYC means a client is verified once and presents the result to other institutions as a signed credential. On Canton, a smart contract can check that credential without anyone seeing the underlying file.

Summary

Reusable KYC is a model where one trusted party verifies a customer once. The customer then presents the result to other institutions as a signed credential, and those institutions do not repeat the full check. The idea is familiar from correspondent banking. What is new is carrying the credential in a form a smart contract can read before a trade settles.

How it works

On 30 April 2026 Global Settlement Network (GSN) joined the Canton Network as a validator and featured application and deployed GSX ID, its credentialing platform. With GSX ID, participants issue and carry on-chain compliance credentials for KYC and AML verification, KYB onboarding, bad-actor screening and investor qualification. GSN's release says an institution can "verify once and have that status recognized across applications operating within Canton". Separately, a draft Canton Improvement Proposal, CIP #204, opened in May 2026. It sets out a network-wide credentials standard that Daml applications can reference.

The building block is the verifiable credential. The W3C Verifiable Credentials Data Model 2.0 has been a W3C Recommendation since 15 May 2025. It defines a verifiable credential as "a tamper-evident credential whose authorship can be cryptographically verified" and splits the roles into issuer, holder and verifier. In KYC terms the issuer is the bank or identity provider that ran the check, the holder is the client, and the verifier is the next institution the client deals with. The verifier checks the issuer's signature and whether the credential is still valid. It never needs the passport scan.

Shared KYC has been tried before as a central utility, where banks upload due-diligence files once and grant counterparties access. Utilities cut duplicated document collection. They also concentrate sensitive data in one database, and each bank still reviews the full file. Credentials push the other way. The personal data stays with the issuer and the client. What travels is a signed statement: who checked this entity, to what standard, and until when the result holds.

Regulators already allow reliance, within limits. In the U.S., a bank's customer identification program may rely on another financial institution if three conditions hold. The reliance has to be reasonable. The other institution has to be subject to an AML program rule and regulated by a federal functional regulator. And it has to certify annually, by contract, that it performs the checks (31 CFR 1020.220(a)(6)). In the UK, regulation 39 of the Money Laundering Regulations 2017 lets a firm rely on another regulated firm or on an equivalent firm abroad. The firm that relies "remains liable for any failure to apply such measures". Every reusable KYC design has to respect that liability rule. The credential must say enough about who checked, when and to what standard for the relying firm to defend its decision.

Canton's privacy model suits this pattern. On Canton, contract data is shared only with the parties to that contract. A credential between an issuer and a client stays invisible to the rest of the network until the client discloses it to a counterparty. A Daml settlement workflow can require a valid credential from a named issuer before it executes. The counterparty then sees the credential and its status, not the KYC file behind it. CIP #204 covers the registry side. Issuers create credentials for holders, both parties can take part in lifecycle updates, and the network operator can invalidate credentials. The draft proposes a default expiry of 90 days. It also leaves KYC-specific claim formats out of scope on purpose, so that registries such as GSX ID can specialise them.

Two gaps remain. Reliance rules differ by jurisdiction, so a credential that satisfies a U.S. bank's program may not meet another regulator's standard. And a credential only proves that a check happened. Each institution still runs its own ongoing monitoring and sanctions screening. What reusable KYC removes is the repeated document collection at onboarding.

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