# Fraud & Verification Layer

### Overview

The fraud and noise filter runs as a mandatory pre-processing step before any data reaches the VIP Engine. Its purpose is to ensure that only economically meaningful, origin-verified, non-manipulated transactions contribute to a user's income profile.

Rupi's verification layer does not use heuristics or ML-based anomaly detection for income classification. Classification is rule-based and deterministic. A transaction either passes all rules or it does not. There is no probability score applied to income verification — only to fraud detection.\
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Rupi uses proprietary detection algorithms in order to monitor and verify.

### Wash Trading Detection

**Definition:** A wash trade occurs when funds are transferred between two addresses and then returned to the origin address within a short time window, creating artificial volume without representing a real economic transfer.

### Circular Flow Detection

**Definition:** A circular flow occurs when funds pass through a chain of three or more addresses and return to the originating address, creating the appearance of income without a real external counterparty.

### Source Verification (Whitelisted Platform Wallets)

Each supported platform maintains a set of registered disbursement or settlement wallet addresses. Rupi maintains a continuously updated registry of these addresses, verified directly with each platform.

### Noise Filtering

Beyond fraud detection, Rupi filters general blockchain noise before ingestion:

**DEX interactions:** Any transaction where `from_address` or `to_address` matches a known DEX router or liquidity pool contract (Uniswap V2/V3, QuickSwap, Curve) is classified as `dex_trade` and excluded from income consideration.

**Smart contract interactions:** Transactions to or from non-EOA addresses (contracts) that are not in the payroll whitelist are classified by contract type (bridge, DEX, protocol) and excluded from income classification.

**Dust transactions:** Inbound transfers of less than $1.00 USDC are classified as `dust` and excluded.

**Self-transfers:** Transactions where `from_address == to_address` are excluded.

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