> For the complete documentation index, see [llms.txt](https://docs.madhousewallet.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.madhousewallet.com/introduction/risk-management.md).

# Risk Management

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## AML Controls

Madhouse Wallet operates a risk-based AML program. All transfers are subject to:

* **Sanctions screening** — UN, EU, and UK consolidated lists checked on every transfer
* **Transaction monitoring** — behavioral anomaly detection and threshold alerts (>$10,000)
* **Recipient verification** — ownership of recipient accounts is enforced via our internal records; a recipient cannot be used by a different account
* **Ongoing screening** — elevated-risk accounts are rescreened quarterly

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## Risk Tiers

| Level  | Criteria                                                 | Review Cadence  |
| ------ | -------------------------------------------------------- | --------------- |
| Low    | Standard business profile, transactions under $10K/month | Every 5 years   |
| Medium | Transactions over $10K/month, cross-border               | Every 2–3 years |
| High   | PEPs, high-risk geographies, complex ownership           | Annual          |

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## Suspicious Activity

Madhouse Wallet files Suspicious Activity Reports (SARs) within **7 working days** of detection. Red flags include:

* Refusal to provide source of funds
* Transfers to conflict zones or sanctioned states
* High-volume transactions structured below reporting thresholds
* Recipients that cannot be independently verified

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## Transaction Failure Policy

Transfers that fail compliance review are placed in a **hold** state (maximum 72 hours) for manual review. Madhouse Wallet does not hard-fail transactions for compliance reasons — only delays while review is conducted.

The 98% off-ramp success rate reflects that the vast majority of transfers complete without intervention.

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## Partner Obligations

See [Partner Responsibilities](/introduction/personal-finance.md) for details on what your integration must handle, including end-user KYC and local reporting requirements.