Klara operates at the intersection of crypto, payments, and global financial infrastructure. Because of this, compliance is not optional. It is a core requirement that shapes how the product is built, how the card system works, how user identity is handled, and how transactions move across borders.

The goal is to give users a modern, self custodial financial experience without cutting corners on regulations that protect both the platform and its customers.

Klara is designed to follow global compliance standards while keeping the user experience simple and respectful of privacy.

Below is the full breakdown.

12.1 Legal Framework Overview

Klara follows a hybrid compliance structure, meaning it operates with:

• card network rules
• payment processor requirements
• regional KYC requirements
• anti money laundering laws
• data protection laws
• crypto specific regulations
• cross border financial rules

The legal structure varies by region, but the principles remain the same:
protect users, follow the law, and maintain transparency.

12.2 KYC and Identity Verification

Klara uses a flexible identity verification approach based on region and regulatory requirements.

Why KYC Exists

Some financial regions require identity verification before issuing payment tools because:

• it prevents fraud
• it prevents money laundering
• it prevents identity abuse
• it ensures card network compliance
• it satisfies local regulators

Klara does not require unnecessary KYC.
Only regions where verification is legally required will enforce it.

Allowed KYC Methods

• biometric verification
• document scanning
• govt issued ID
• passkey verified accounts
• smart contract based proofs (future)

Users should always remain in control of their identity information.

12.3 AML and Transaction Monitoring

Klara follows international AML standards to prevent illegal financial activity.

This includes:

• detection of suspicious behavior
• blocking of known fraud patterns
• monitoring of high risk merchant categories
• analysis of card usage anomalies
• region specific compliance checks

AML checks do not compromise the self custody design.
Your vault remains in your control at all times.

12.4 Card Network Compliance

To operate globally, Klara must comply with:

• Visa or Mastercard rules
• region based acquiring laws
• cross border settlement rules
• international transaction codes
• dispute and chargeback processes

Klara’s backend settlement layer is designed to match these requirements without touching user assets.

12.5 Data Protection and Privacy

Klara respects global privacy laws including:

• GDPR
• ePrivacy
• Local Data Protection Acts

Privacy principles include:

• no selling data
• no unnecessary data harvesting
• no hidden tracking
• encrypted storage
• minimal data retention
• user controlled deletion

Self custody also ensures that private financial data never touches a centralized wallet or custody system.

12.6 Crypto Regulatory Compliance

Crypto rules vary by country.
Klara aligns with:

• stablecoin regulations
• virtual asset frameworks
• digital asset licensing
• tax reporting advisories
• consumer protection guidelines

Klara avoids:

• holding user crypto
• operating as a centralized exchange
• mixing customer funds

• performing unregulated lending

This reduces regulatory exposure and protects the protocol.

12.7 Regional Restrictions

Some regions have stricter rules for crypto or credit products.
Klara follows:

• regional card issuance laws
• crypto usage restrictions
• country specific compliance blocks

Certain countries may not be supported depending on:

• sanctions
• unstable regulatory frameworks
• restricted card network operations

This ensures ecosystem safety and legal clarity.

12.8 Terms of Use and User Agreements

Klara’s legal documents outline:

• user rights
• platform responsibilities
• cardholder agreements
• dispute resolution
• disclaimers
• liability limits

These documents ensure users understand:

• how the system works
• what Klara can and cannot do
• what rights users maintain
• what protections are available

Clarity is a priority.

12.9 Why Compliance Matters

Compliance is not about making the system restrictive.
It is about ensuring:

• long term survival
• global scaling
• user safety
• card network access
• legal clarity
• ecosystem legitimacy