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  4. Zero-knowledge proof framework for privacy-preserving financial compliance

Zero-knowledge proof framework for privacy-preserving financial compliance

MMC.
2025;
Volume 12, Number 1
: pp. 342–354
https://doi.org/10.23939/mmc2025.01.342
Received: February 20, 2025
Revised: March 22, 2025
Accepted: March 25, 2025

Solomka I., Liubinskyi B.  Zero-knowledge proof framework for privacy-preserving financial compliance.  Mathematical Modeling and Computing. Vol. 12, No. 1, pp. 342–354 (2025)      

Authors:
  1. I. R. Solomka
  2. B. B. Liubinskyi
1
Lviv Polytechnic National University
2
Lviv Polytechnic National University

This article presents a minimal viable product (MVP) architecture and proof-of-concept implementation that leverages zero-knowledge proofs to conduct essential KYC checks on a blockchain network without disclosing sensitive user information.  The design employs a trusted off-chain KYC provider to validate user credentials, then uses succinct cryptographic proofs, compiled and verified with Groth16, Circom, and snarkjs, to guarantee compliance on-chain.  A single smart contract deployed on a test network (Sepolia) verifies these proofs while insulating personal data from public exposure.  The article outlines a practical off-chain/on-chain data flow, discusses essential performance metrics such as proof generation time and gas costs, and describes limited user testing for qualitative feedback.  By integrating regulated AML checks with privacy-oriented ZKP protocols, this work demonstrates that decentralized applications can satisfy stringent compliance standards while upholding the confidentiality of user identities.

blockchain
zero-knowledge proofs
know your customer (KYC)
anti-money laundering (AML)
off-chain processing
on-chain verification
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