Compliance with Tornado Cash
Tornado Cash Official is a decentralized protocol prioritizing privacy, but it offers compliance tools for users needing to demonstrate transaction legitimacy. This page covers compliance options and considerations.
Compliance in a Privacy Protocol
While Tornado Cash Official ensures anonymity through zk-SNARKs, users may need to comply with regulations like Anti-Money Laundering (AML) or Know Your Customer (KYC) when interacting with centralized exchanges or authorities.
Note: Tornado Cash Official is a non-custodial protocol and does not enforce KYC/AML itself, but users should understand their local regulations.
Compliance Tools
Tornado Cash Official provides tools to prove transaction legitimacy without compromising privacy:
- Compliance Tool: Users can generate a compliance report using their private note, revealing the deposit and withdrawal details to a specific party (e.g., an exchange).
- Public Auditability: All transactions are recorded on the blockchain, allowing authorized parties to verify activity with the correct data.
- Selective Disclosure: Users can share their private note with regulators or auditors to confirm the source of funds.
Using the Compliance Tool
Follow these steps to generate a compliance report:
- Access the Interface: Visit the Tornado Cash Official compliance section (verify the URL on GitHub).
- Enter Private Note: Input the note received during your deposit.
- Generate Report: The tool creates a report detailing the deposit and withdrawal, which can be shared with the required party.
- Share Securely: Send the report directly to the recipient, avoiding public disclosure.
Warning: Sharing your private note publicly compromises your anonymity. Only share with trusted parties.
Regulatory Considerations
Users should be aware of:
- Jurisdictional Laws: Regulations vary by country. Consult legal experts to ensure compliance with local AML/KYC laws.
- Exchange Requirements: Centralized exchanges may flag Tornado Cash Official transactions and request proof of legitimacy.
- Risks: Non-compliance with regulations may lead to account freezes or legal issues (see risks).
Best Practices
Maintain compliance while preserving privacy:
- Keep records of your private notes in a secure, offline location.
- Use the compliance tool only when necessary and with trusted entities.
- Combine compliance efforts with TOR for network privacy.
Further Reading
Explore related topics:
- Risks for potential pitfalls.
- Smart Contracts for technical details.
- FAQ for common questions.