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Security & Data Handling

This document defines AI Wallet's security posture and data handling practices across environments and vendors. Objective: Establish data classification, key/secrets management, access controls, incident response, and auditability.

Security Framework Overview

Core Security Principles

  • Governance First: Per-user/app/org budgets, velocity/anomaly locks, kill-switch capability
  • Token Hygiene: Short-lived capabilities, minimal policy edge enforcing budgets before hitting gateways
  • Funding Rails: Prepaid, non-redeemable credits to avoid stored-value complexity
  • Auditability: Tamper-evident receipts for all transactions and policy decisions

Data Classification and Protection

Data Categories

  1. Public Data
  2. API documentation, pricing information, marketing materials
  3. Public partner directory listings (with partner consent)

  4. Anonymous usage analytics and aggregate metrics

  5. Internal Data

  6. System logs, performance metrics, operational dashboards
  7. Partner integration details, revenue sharing data

  8. Product roadmap and strategic planning documents

  9. Sensitive Data (Protected)

  10. Individual API keys and authentication tokens
  11. User account information and preferences
  12. Partner financial data and revenue sharing records
  13. Consent receipts and audit logs

  14. Policy configurations and access control rules

  15. Highly Sensitive Data (Restricted)

  16. Raw payment method details (tokenized, never stored)
  17. Enterprise contract terms and pricing
  18. Security incident details and response procedures

Data Handling Requirements

  • Encryption at Rest: AES-256 for all sensitive data storage
  • Encryption in Transit: TLS 1.3 for all communications
  • Access Logging: Every data access logged with user, time, purpose
  • Retention Policies: Minimal retention aligned with business need
  • Data Minimization: Collect only what is necessary for service operation

Governance Controls

Budget Management Framework

  • Per-User Budgets: Individual daily/weekly/monthly spending limits
  • Per-App Budgets: Application-level budget controls and alerts
  • Organization Budgets: Multi-level organizational budget hierarchy
  • Emergency Controls: Immediate budget suspension and emergency shutdown

Rate Limiting and Velocity Controls

  • API Rate Limits: Configurable per-endpoint and per-user limits
  • Anomaly Detection: Automated detection of unusual usage patterns
  • Velocity Locks: Automatic throttling when spending velocity exceeds normal patterns
  • Kill Switch: Immediate service suspension capability for security events

Policy Edge Proxy

  • Pre-Gateway Enforcement: Budget checks occur before API gateway routing
  • Minimal Policy Layer: Lightweight proxy that adds governance without significant latency
  • Transparent Operation: Policy enforcement invisible to end users
  • Fail-Safe Defaults: Secure-by-default behavior when policy services are unavailable

Key and Secrets Management

Authentication and Authorization

  • OAuth 2.1: Industry-standard authorization framework
  • JWT Tokens: Short-lived access tokens with automatic rotation
  • Refresh Token Security: Secure refresh with device binding and IP validation
  • API Key Management: Rotation, revocation, and least-privilege access

Key Hierarchy

  1. Master Keys: Hardware Security Module (HSM) protected
  2. Service Keys: Encrypted database storage with key rotation
  3. User Keys: Derived from user credentials, never stored
  4. Application Keys: Unique per integration, scoped permissions

Rotation and Lifecycle

  • Automatic Rotation: Keys automatically rotated on scheduled intervals
  • Emergency Revocation: Immediate key invalidation capability
  • Graceful Transitions: Key rotation without service interruption
  • Audit Trail: Complete history of key creation, use, and retirement

Access Control and Least Privilege

Role-Based Access Control (RBAC)

  • Admin Roles: Full system access, change management
  • Support Roles: Customer support with read-only access to customer data
  • Service Roles: Automated services with minimal required permissions
  • User Roles: End users with access only to their own data

Permission Management

  • Principle of Least Privilege: Minimal permissions for each role
  • Time-Limited Access: Temporary elevated permissions with automatic expiry
  • Approval Workflows: Multi-person approval for sensitive operations
  • Regular Access Reviews: Quarterly review of all access permissions

Identity and Access Management

  • Single Sign-On (SSO): SAML/OIDC integration for enterprise customers
  • Multi-Factor Authentication: Required for all administrative access
  • Session Management: Secure session handling with automatic timeout
  • Device Trust: Device registration and trust verification for mobile apps

Incident Response and Communications

Security Incident Classification

  1. Level 1 (Critical): Data breach, system compromise, service outage
  2. Response Time: 1 hour
  3. Escalation: Immediate C-level notification

  4. External: Regulatory notification within 72 hours

  5. Level 2 (High): Security policy violation, attempted unauthorized access

  6. Response Time: 4 hours
  7. Escalation: Security team notification within 1 hour

  8. External: Customer notification within 24 hours

  9. Level 3 (Medium): Minor security events, policy exceptions

  10. Response Time: 24 hours
  11. Escalation: Security team review within 4 hours

  12. External: No external notification required

  13. Level 4 (Low): Security monitoring alerts, preventive actions

  14. Response Time: 72 hours
  15. Escalation: Weekly security team review
  16. External: No external notification required

Incident Response Procedures

  • Immediate Actions: Service isolation, evidence preservation, stakeholder notification
  • Investigation: Forensic analysis, impact assessment, root cause identification
  • Remediation: System fixes, policy updates, security improvements
  • Communication: Internal updates, customer notifications, regulatory reporting
  • Post-Incident: Lessons learned, process improvements, security training

Communication Protocols

  • Internal: Slack security channel, email distribution lists, incident war room
  • Customer: Status page, email notifications, in-app messages
  • Regulatory: Legal team coordination, regulatory counsel consultation
  • Public: PR team coordination, media response preparation

Logging, Auditing, and Compliance

Audit Logging

  • Authentication Events: Login attempts, session creation/destruction
  • Authorization Events: Permission grants, access denials, privilege escalations
  • Data Access: Read/write operations, data exports, configuration changes
  • System Events: Service deployments, configuration changes, maintenance activities

Log Management

  • Centralized Logging: All logs aggregated in secure, centralized system
  • Real-time Monitoring: Automated alerting on suspicious activities
  • Long-term Retention: 1-year minimum retention for audit compliance
  • Immutable Storage: Write-once, read-many storage for audit integrity

Compliance Framework

  • SOC 2 Type II: Annual audit for security and availability controls
  • GDPR Compliance: Data protection impact assessments, privacy controls
  • CCPA Compliance: California Consumer Privacy Act requirements
  • PCI DSS: Payment card industry data security standards (for credit card processing)

Compliance Monitoring

  • Automated Checks: Continuous compliance monitoring and validation
  • Regular Assessments: Quarterly internal compliance reviews
  • External Audits: Annual third-party security assessments
  • Regulatory Updates: Regular review of regulatory requirement changes

Third-Party and Vendor Review

Vendor Security Assessment

  • Security Questionnaires: Comprehensive security assessment for all vendors
  • Penetration Testing: Annual third-party security testing of critical vendors
  • Incident Notification: Require vendors to notify within 24 hours of security incidents
  • Contract Requirements: Security obligations in all vendor contracts

Third-Party Service Integration

  • API Security: Secure API integration with proper authentication
  • Data Sharing: Minimal data sharing with third-party services
  • Vendor Access: Audit trails for all vendor access to systems
  • Service Level Agreements: Security SLAs with critical service providers

Cloud Security

  • Cloud Provider: Multi-cloud strategy with security diversity
  • Container Security: Secure containerization with image scanning
  • Network Security: Virtual private cloud (VPC) with private subnets
  • Backup Security: Encrypted backups with geographic distribution

Funding Security Model

Prepaid Credit System

  • Non-Redeemable Credits: Credits can only be used for services, not cashed out
  • Stripe Integration: Secure payment processing with PCI compliance
  • USDC Option: Optional cryptocurrency payments with compliance framework
  • Credit Expiration: Fair expiration policies to prevent abuse

Financial Controls

  • Budget Enforcement: Automatic enforcement of user-defined budget limits
  • Overage Protection: Automatic service suspension when budgets are exhausted
  • Refund Policy: Clear refund policies for unused credits
  • Financial Reporting: Regular financial reconciliation and reporting

Risk Management

  • Credit Card Processing: Tokenized payment data, no raw card storage
  • Chargeback Protection: Fraud detection and prevention measures
  • Financial Monitoring: Real-time financial monitoring and anomaly detection
  • Insurance Coverage: Appropriate cyber liability and errors & omissions insurance

Security Metrics and Monitoring

Key Security Indicators

  • Authentication Success Rate: Monitor for brute force attacks
  • API Usage Patterns: Detect unusual usage that may indicate abuse
  • System Performance: Monitor for performance degradation that may indicate attacks
  • Compliance Score: Track compliance with security policies and procedures

Security Dashboards

  • Real-time Security Status: Current threat level, active incidents, system health
  • Compliance Dashboard: Compliance status across all applicable frameworks
  • Financial Security: Budget compliance, fraud detection, payment security
  • Operational Security: Access controls, system integrity, incident response

Continuous Improvement

  • Security Reviews: Quarterly security program review and updates
  • Threat Modeling: Regular threat model updates for new features and services
  • Security Training: Regular security awareness training for all team members
  • Penetration Testing: Annual third-party penetration testing of all systems

Source: MVPPlan-CloudCredits-Angels-01Nov25-ChatGPTPlus.pdf