AML

Anti-Money Laundering

AML stands for Anti-Money Laundering. It refers to the laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their illegal activities, such as drug trafficking, terrorism, corruption, or fraud.

AML measures are put in place by financial institutions, governments, and international organizations to detect, deter, and disrupt money laundering activities. These measures typically include:

1. Customer Due Diligence (CDD): Financial institutions must verify their customers’ identity and assess the risk of them engaging in money laundering activities.
2. Transaction monitoring: Financial institutions must monitor customer transactions for suspicious activities, such as large cash deposits, wire transfers to high-risk jurisdictions, or unusual behavior patterns.
3. Reporting: Financial institutions must report suspicious activities to relevant authorities, such as the Financial Crimes Enforcement Network (FinCEN) in the United States.
4. Recordkeeping: Financial institutions must maintain detailed records of customer transactions and identification documents to facilitate investigations and audits.
5. Training: Financial institution employees must receive regular training on AML policies, procedures, and red flags to help them identify and report suspicious activities.

AML regulations have become increasingly stringent in recent years, with financial institutions facing significant fines and reputational damage for non-compliance. As a result, many organizations are turning to RegTech solutions to help them manage their AML obligations more effectively and efficiently.

• Abbreviation: AML