Concise view: Design on-chain events to be structured, auditable, and minimally sufficient — include canonical fields (actor, counterparty, amount, epoch, operation type, reference id). Complement events with epoch-anchored batch roots for tamper-evidence. Build small on-chain alert indices and circuit-breaker hooks that off-chain watchers can trigger or that the protocol can run automatically in case of anomalous event patterns.

Why this approach:

• Events are cheap and the canonical way to stream data for off-chain systems. But raw events alone are not tamper-evident if a reorg can re-order them; anchoring batch roots to checkpoints makes event inclusion provable.

• Compliance wants real-time alerts. Add on-chain tagged events (e.g., AML_ALERT) for policy engines to route quickly. Keep heavy analysis off-chain but make it provable on-chain when necessary.

• Circuit breakers must be simple and auditable (e.g., pause() toggles guarded by multisig or emergency governance). Design elements & trade-offs:

• Structured events: prefer typed events rather than blobs; it’s easier for indexers and less error-prone.

• Tamper-evidence: publish batch Merkle roots referencing event lists; finalize them after a dispute window to anchor history.

• On-chain minimal indices: keep bounded-size top-alerts index (e.g., top 100 suspicious transfers) so smart contracts can make quick heuristics on-chain without scanning logs.

• Privacy balance: emit hashed identifiers for privacy-sensitive data and allow selective disclosure with signed attestations / zk-proofs when regulators request proof.

Move example — structured events + alert index + batch root anchoring

module audit::compliance {
    use sui::object::{UID};
    use std::vector;

    // Structured event types (emitted as Move events)
    struct TransferEvent has store {
        from: address,
        to: address,
        amount: u128,
        market: vector<u8>,
        epoch: u64,
        tag: vector<u8>, // e.g., "AML_SUSPECT", "KYC_CHECK"
        ref_id: vector<u8>, // off-chain reference / claim
    }

    struct BatchRoot has key {
        id: UID,
        epoch: u64,
        root: vector<u8>,
        finalized: bool,
    }

    // small on-chain list of recent high-priority alerts
    struct RecentAlertIndex has key {
        id: UID,
        alerts: vector<vector<u8>>, // store compact alert hashes
        max_size: u64,
    }

    // Emit transfer event (must be done inside state-changing flows)
    public(entry) fun emit_transfer(from: address, to: address, amount: u128, market: vector<u8>, tag: vector<u8>, clock_epoch: u64) {
        let ev = TransferEvent { from, to, amount, market, epoch: clock_epoch, tag, ref_id: vector::empty() };
        event::emit(ev);
    }

    // Anchor a batch root (off-chain systems push an epoch root of events)
    public(entry) fun anchor_batch(root_obj: &mut BatchRoot, root: vector<u8>) {
        root_obj.root = root;
        root_obj.finalized = false;
        // after dispute window, a finalize action will set finalized = true
    }

    // push alert into recent index (bounded)
    public(entry) fun push_alert(idx: &mut RecentAlertIndex, alert_hash: vector<u8>) {
        vector::push_back(&mut idx.alerts, alert_hash);
        if (vector::length(&idx.alerts) > idx.max_size) {
            // simple drop-oldest logic
            // remove first element (implementation omitted for brevity)
        }
    }

    // finalize anchor after dispute window (off-chain watchers manage disputes)
    public(entry) fun finalize_anchor(root_obj: &mut BatchRoot, now_epoch: u64) {
        // require now_epoch >= root_obj.epoch + DISPUTE_WINDOW (enforce off-chain)
        root_obj.finalized = true;    }
}

Operational recommendations:

• Off-chain watchers should index events in real-time, evaluate compliance rules, and submit on-chain anchor_batch calls for tamper-evidence.
• Keep tag vocabulary standardized (e.g., AML_ALERT, LARGE_TRANSFER, GOV_ACTION) so downstream systems subscribe easily.
• For strong guarantees, accept challenges against BatchRoot within a short dispute window — if a fraud proof is posted, roll-back and revert dependent state.

To build auditable and real-time compliance monitoring tools for on-chain financial protocols on Sui, you can take advantage of Sui’s native event system by emitting structured, tamper-proof events at every key transaction point—like transfers, trades, deposits, or strategy changes. These events act as immutable logs that external compliance services or dashboards can subscribe to and analyze in real time. Since events in Sui are stored separately from object state and indexed off-chain, they’re ideal for compliance tracking without impacting contract performance or requiring direct access to sensitive state.

To maintain auditability, standardize your event formats with consistent fields like sender, recipient, amount, action_type, timestamp, and any compliance flags. For real-time monitoring, you can integrate off-chain services that listen to Sui’s event stream and apply rules (like AML/KYC thresholds, blacklisted addresses, or suspicious patterns) as soon as events are emitted.

To explore Sui's event system in more depth, check the docs here.

Here’s an example of how to emit structured events in Move:

module ComplianceTracker {
    struct TransferEvent has drop {
        sender: address,
        recipient: address,
        amount: u64,
        action: vector<u8>,
        timestamp: u64,
    }

    public fun log_transfer(sender: address, recipient: address, amount: u64) {
        let event = TransferEvent {
            sender,
            recipient,
            amount,
            action: b"transfer",
            timestamp: Timestamp::now(),
        };
        emit event;
    }
}

By emitting these events consistently across your protocol, you enable real-time compliance tools to audit activity, detect violations, and generate regulatory reports without needing direct interaction with contract state.