Know your transaction (KYT)

A commercial term used in blockchain analytics for the screening of transactions for risk signals, such as exposure to sanctioned entities, darknet markets, scams, ransomware or stolen funds. KYT is not a defined regulatory term; the related regulatory obligation is ongoing transaction monitoring, which forms part of customer due diligence (CDD).

VASPs typically use blockchain analytics software to screen outgoing withdrawals before execution, incoming deposits after they appear on-chain but before crediting them to a customer, and previously processed transactions when new attribution data changes their risk profile. Screening may identify direct exposure to a flagged entity or indirect exposure through multiple intermediary transfers. The weight assigned to indirect exposure varies between providers.

Alerts and risk scores depend on the provider's attribution data and proprietary methodologies, which may be probabilistic and incomplete. Different tools may therefore assess the same transaction differently. An alert is a lead for further investigation, not proof of illicit activity. KYT complements KYC: KYC helps establish who the customer is, while KYT assesses transaction-related risk.