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Identity systems enforce international sanctions compliance by integrating VCs for sanctioned entity lists, ownership structures, and transaction histories. Zero-knowledge proofs (ZKPs) verify compliance without exposing sensitive data. Smart contracts automate sanctions screening during onboarding, payments, or cross-border transactions. Blockchain audit trails provide immutable records for regulatory reporting. Users manage compliance credentials via self-sovereign identity (SSI), streamlining checks across jurisdictions while adhering to OFAC, EU, and UN guidelines.

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