Dusk Network Launches Citadel: Zero-Knowledge KYC Solution

Paper published and first use cases in development Fintech scale-up Dusk Network presents Citadel, a zero-knowledge KYC solution where users and authorities are in control of sharing consent around digital identity verification and providing personal information to it. The framework can be used for all KYC requests and gives users total control over what information they share, for how long and with whom, while being fully compliant and private at the same time.

After months of research and submission of the official research paper to arXiv, Dusk is proud to launch this groundbreaking technology called Citadel. It is one of the first decentralized Know Your Customer (KYC) solutions aimed at the financial ecosystem, inviting agencies to use the technology for cost-effective compliance. Since the user is in control of his own data, there is no need to do KYC on service providers that have already been used. Or, for example, more KYC processes for asset trading.

How does Citadel work?

Dusk Network is the first to integrate zero-knowledge KYC technology into a Layer-1 (L1) blockchain. It is an important feature of Dusk itself to implement it in its privacy-preserving protocol. By using the Citadel framework, an entity that is authorized to handle private information – for example, the Dusk company that meets all the necessary regulations and is allowed to process private information, or a company that has been verified to perform KYC on behalf of institutions – can create a list of requirements for their KYC verification. The user who needs to complete the KYC can provide the necessary information, share how long their information can be stored and revoke access to their data. The relevant company will then verify the data, which is privately stored in the Dusk blockchain, and issue a license confirming the data transaction. To simplify: non-fungible token (NFT) technology is used, creating a license instead of a work of art.

use case

Suppose a customer opens a bank account, then a KYC procedure must be completed and personal information must be shared with the bank. If the account is issued and the user then decides to start trading shares, an account must be opened with a broker, where KYC/Anti-Money Laundering (AML) must also be carried out. The same information must always be shared with them, otherwise the bank will give it to them. If a house is bought with a mortgage, a KYC/AML procedure will also be initiated for the sharing of all personal data. All these players will store and store this information, which has both a large impact on user privacy and a risk of data breach. Conversely, when Citadel is used, the data is held by one party that can only store and verify data, and other services may choose to accept the licenses and use them as KYC/AML evidence.

This reduces risk and privacy exposure. In a full-chain world, it is possible to buy regulated assets simply by granting a license that the customer meets the requirements of the trading platform. The customer can borrow money from a lender by providing a license stating that it meets their KYC and AML requirements. The customer can borrow money and get a return simply by giving the license. No personal information should be shared with the three different parties involved, once is enough. For security reasons, a quarterly check for the accuracy of all data provided in the license can help keep the data up to date.

Cost effective solution for compliance

Banks and financial institutions often complain that new rules such as the travel rule* and other anti-money laundering measures are costly operations, costs which are also passed on to the customer. The processes to meet the requirements are tedious, time-consuming and involve many unnecessary parties, making the process even more challenging. As an SSI protocol, Citadel can form the basis of a KYC service that can relieve financial institutions of the need to do KYC/AML themselves and/or with third parties. It can significantly reduce the cost of collecting, protecting and renewing customer data. A KYC provider built on Citadel will speed up processes and information is always up to date, available in real time and privacy is protected. With Citadel, the customer is fully responsible for his own data, without unnecessary copying of information and reduced risk of information leakage.

In addition to digital identity verification as in the above use case, Citadel can be used for privacy-preserving transactions and global compliance.

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