> For the complete documentation index, see [llms.txt](https://docs.lumia.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.lumia.org/ecosystem/lumia/compliance/compliance-model-overview.md).

# Compliance model overview

**Who this is for:** issuers and developers who want the whole compliance vocabulary in one place before reading each check's own page. For the architecture behind these checks, see [Permissionless base, permissioned app layer](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/ecosystem/lumia/compliance/permissionless-base-permissioned-app-layer). For summarized versions aimed at other audiences, see [`/tokenize/legal/compliance-overview`](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/tokenize/legal/compliance-overview-for-issuers) (issuer lens) and [`/institutions/compliance-posture`](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/institutions/compliance-posture) (institutional lens). Both link back to this page rather than repeating the definitions below.

### Where compliance lives

Compliance on Lumia is enforced at the **application layer** (inside the contract or app an issuer deploys), not at the protocol layer. The base chain does not check identity before including a transaction in a block. This is a deliberate choice: it lets fully permissionless DeFi-style contracts and tightly gated RWA contracts run side by side on the same chain, each choosing its own rules. The mechanics of that split are covered in full at [Permissionless base, permissioned app layer](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/ecosystem/lumia/compliance/permissionless-base-permissioned-app-layer).

### The four checks

These four terms are a general RWA-industry vocabulary (used elsewhere in the space, not a Lumia-specific trademark) applied here to describe what an issuer's application layer can check for.

| Check                                                                                                                             | What it verifies                                                 | Typically applies to                                 |
| --------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ---------------------------------------------------- |
| [KYC](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/ecosystem/lumia/compliance/kyc-know-your-customer): Know Your Customer       | Identity of an individual                                        | Retail/individual token holders                      |
| [KYB](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/ecosystem/lumia/compliance/kyb-know-your-business): Know Your Business       | Identity and standing of a corporate entity                      | Institutional investors, the issuer entity itself    |
| [KYT](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/ecosystem/lumia/compliance/kyt-know-your-transaction): Know Your Transaction | Transaction-level risk (sanctions, suspicious-pattern screening) | Individual transfers, checked at the app layer       |
| [KYV](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/ecosystem/lumia/compliance/kyv-know-your-validator): Know Your Validator     | Standing of infrastructure counterparties                        | Validators, node operators, ecosystem infrastructure |

Each has its own page with a fuller definition and where it applies.

The table above maps to a single routing question: what is actually being checked.

```mermaid
flowchart TD
    Q{What is being checked} -->|an individual's identity| KYC[KYC: retail or individual holders]
    Q -->|a corporate entity's identity and standing| KYB[KYB: institutional investors, issuer entity]
    Q -->|a specific transaction's risk| KYT[KYT: individual transfers, app-layer screening]
    Q -->|an infrastructure counterparty's standing| KYV[KYV: validators, node operators]
```

This does not show where in an issuer's contract each check is called, or the off-chain verification process behind it; see [Permissionless base, permissioned app layer](https://app.gitbook.com/s/chmhPiVNAafGw48c4oU2/ecosystem/lumia/compliance/permissionless-base-permissioned-app-layer) for that.

### Scope

This is a technical and architectural model: where a check runs and what it verifies. **Lumia makes no jurisdictional, licensing, or regulatory claim.** Whether a given asset or application is compliant in a given jurisdiction is a legal question for the issuer and its counsel.