HIP-1340: Principal — Cryptographic Identity Statements & Authorization Clearance Plane

Abstract

Package principal (/v1/principal) defines the formal clearance and cryptographic verification plane for cross-organization entity authorization, sanctions/compliance checks, and payment clearance. Operating in conjunction with Hanzo IAM (hanzo.id) and sovereign DID identities (did:hanzo:<org>:<user>), principal provides automated, data-driven decisions on whether organizations may transact, contract, or exchange payments on Hanzo rails.

This proposal specifies the payment clearance lifecycle, regulatory obligation determination, and verifiable cryptographic identity statements.

Motivation

Cross-organization commerce, B2B contracting, and multi-tenant billing require deterministic compliance boundaries. Transactions between entities can trigger regulatory, sanctions (OFAC), anti-money laundering (FATF Travel Rule), and tax withholding obligations.

Traditional architectures rely on asynchronous, out-of-band compliance reviews that interrupt transactions and introduce subjective delays. principal formalizes clearance as an immediate, rule-based data object (Clearance), evaluating payer/payee status, category of service, jurisdictions, and reporting thresholds synchronously before funds move.

Specification

The key words MUST, MUST NOT, SHOULD, SHOULD NOT and MAY are to be interpreted as in RFC 2119.

1. Payment Clearance Model (Clearance)

Before a transaction settles between two organizations, the payment rail requests a decision from /v1/principal/clearance:

• Clearance Identifier: Unique string prefixed with clr_.
• Parties: Payer organization and payee organization.
• Transaction Parameters: Gross amount, currency/rail, service category (services, attorney, rents, royalties, merchandise, other), and performance location.
• Decision Properties:
  • allowed: Boolean indicating whether the payment is cleared to proceed immediately.
  • status: Payee classification (us, foreign, or unknown).
  • required_before_payment: Array of blocking steps (e.g. missing W-9 certification, manual review).
  • reporting_obligations: Array of tax/regulatory reporting liabilities incurred (e.g. 1099-NEC).
  • withholding: Required statutory tax withholding amounts, if any.
  • rules: Ordered citation of all platform and legal rules governing the decision.

2. Cryptographic Identity Statements

• Sovereign principals emit signed statements attesting to clearances, accreditations, and membership proofs.
• Verifiers validate statements client-side against the entity's public keys published at https://hanzo.id/.well-known/jwks.json and DID documents (HIP-0097).
• Statements provide non-repudiable audit trails for SOC2, ISO 27001, and financial regulatory audits.

3. HTTP Endpoints