Canonical Statement
Nested service exposure MUST be assessed as indirect counterparty risk with explicit mapping of service chains and control responsibilities.
Definition
This model maps multi-entity crypto service chains, identifies control ownership (CDD, Travel Rule, sanctions, monitoring), and evaluates indirect exposure over time.
Why It Matters
Direct counterparties can mask downstream entities where actual risk and control gaps sit.
Failure Mode if Ignored
Institutions assume end-to-end control coverage, while nested provider changes and unknown sub-chains create unmanaged exposure.
Scope & Non-Claims
This entry is scoped to complex service-chain assessment in regulated banking environments in the EU/UK.
This entry does not provide legal advice and requires human validation for final compliance determinations.
Related Concepts
- Counterparty risk assessment in crypto transactions (EU) (methodology)
- Travel Rule applicability and counterparty information (EU) (regulatory-context)
- Sanctions exposure and screening in crypto contexts (EU) (methodology)