AntiMoneyLaundering

Anti-money laundering (AML) refers to laws, regulations, policies, and procedures designed to prevent criminals from legitimizing the proceeds of crime. Its aim is to detect, deter, and report money movements that may finance illicit activity and to reduce the availability of criminally derived funds in the financial system. AML addresses a range of offenses, including drug trafficking, fraud, corruption, and terrorism financing.

International standards play a central role in AML efforts. The Financial Action Task Force (FATF) issues recommendations that set common technical standards for member countries. National regimes adopt these standards through laws and supervising authorities. In many jurisdictions, AML frameworks are complemented by specific measures such as the U.S. Bank Secrecy Act and the Patriot Act, and by regional directives like the European Union’s AML directives, all implemented through financial regulators and law enforcement cooperation.

Key elements of AML programs include customer due diligence (CDD) and enhanced due diligence (EDD) for higher-risk customers, ongoing monitoring of transactions, and the reporting of suspicious activities (SARs) to authorities. Institutions maintain records and, in many places, report large cash transactions. Sanctions screening and verification of beneficial ownership for legal entities are also common components, along with a risk-based approach to compliance.

AML spans financial and non-financial sectors, including banks, securities firms, real estate, and professional services. Global enforcement relies on cross-border cooperation, information sharing, and coordinated investigations to trace and confiscate illicit assets.

Ongoing challenges include evolving money-laundering techniques, the growth of digital assets, and the need for consistent international implementation and adequate compliance resources.