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Compliance Freezes, Refunds & Reversals

This page explains how Noah handles compliance freezes, refunds, and reversals across payin and payout flows.

Compliance Freezes​

A compliance freeze occurs when a transaction requires Enhanced Due Diligence (EDD) review before proceeding.

When Freezes Occur​

FlowFreeze PointWhat Happens
Payin (Fiat → Crypto)FiatDeposit stageFiat is received but not converted to crypto until review completes
Payout (Crypto → Fiat)CryptoSettlement stageCrypto is received but not converted and paid out until approved

What to Expect During a Freeze​

  1. EDD Request: Noah's Compliance team will request documentation based on your KYC model (Reliance or Standard)
  2. 10-Day Window: Customers have 10 days to provide requested documentation
  3. Resolution:
    • Approved: Funds are unfrozen, converted, and sent to the destination
    • Rejected: Transaction is rejected and funds are automatically refunded

What Triggers Enhanced Due Diligence​

EDD can be triggered by transaction-level conditions, customer risk factors, or a combination of both.

Transaction-Level Triggers​

These thresholds are enforced per Virtual Account currency. When a limit is exceeded, the deposit is frozen at the FiatDeposit stage pending review.

CurrencySingle-Transaction LimitMonthly Aggregate LimitThird-Party Trigger
USD$10,000$20,000Non-family third-party deposits exceeding $5,000
EUR€15,000€30,000-

For the full guardrails per currency, including third-party deposit rules, see the respective payin recipe: USD Guardrails, EUR Guardrails.

Customer Risk Triggers​

Noah applies Enhanced Due Diligence on B2B2C customers if:

  • The customer is identified as a Politically Exposed Person (PEP)
  • The customer is from a FATF or EU high-risk third country
  • The customer is from a highly corrupt country
  • The customer is from a country with a weak AML/CTF regime

All jurisdictions that fall under these categories can be found on the official FATF, EU, and CPI websites.

Additionally, Noah scores customers based on their:

  • Main source of income - whether the customer has a regular and reliable source of income
  • Employment status
  • Industry of employment
  • Transactional forecasts

How to Handle EDD in Your Integration​

When EDD is triggered, your system will observe the FiatDeposit webhook remaining in Pending status beyond normal processing times. The deposit is frozen - no conversion or withdrawal occurs until review completes.

  • Reliance Model: Noah contacts your compliance team to request documentation (Proof of Source of Funds, full KYC pack, purpose of transaction).
  • Standard Model: Noah contacts your customer directly via their email address on file (Proof of Source of Funds, purpose of transaction).

Your customer has 10 days to provide the requested documentation. If approved, the deposit is unfrozen and processing continues. If documents are not provided within the window, the transaction is rejected and funds are automatically refunded.

UX recommendation: If a FiatDeposit remains in Pending status for longer than the expected settlement time for the payment method (see FiatDeposit Event), display a message to your user indicating that their deposit is under review and they may be contacted for additional documentation.

Refunds​

Refunds can happen as a result of an EDD/Compliance rejection.

Refund Destinations by Flow​

ScenarioRefund Destination
Payin (Fiat deposit)Depositing Payment Method
Payout (Prefunded dashboard balance)Custodian Stablecoin Account
Payout (Customer crypto deposit / automated payouts)Sending Crypto Wallet

Refund Lifecycle​

Refunds progress through the following statuses:

StatusDescription
PendingRefund requested, being processed
CompletedFunds returned to destination
FailedRefund could not complete (contact support)

You will receive FiatDeposit webhook updates as the refund status changes. The Refunds array in the webhook payload contains the complete refund history.

Reversals​

Reversals are distinct from refunds.

Key Difference: Refunds vs. Reversals​

AspectRefundReversal
WhenBefore transaction settlesAfter transaction has settled
TriggerEDD/Compliance rejectionRegulatory or banking-level intervention
FrequencyStandard processRare
Handled byAutomated systemCompliance teams/representatives directly

Transaction Finality​

Noah transactions are processed with finality on Settled status for both payins and payouts. Once a transaction reaches Settled, under normal circumstances the transaction is complete.

When Reversals Happen​

Reversals occur in rare cases, typically where regulatory or banking-level intervention has occurred. This case is handled manually, where your team will be notified via email, not via the API.