Anti-Money Laundering (AML)
What Anti-Money Laundering means, the regulatory framework, and how AML compliance programs work.
1 min read
Anti-Money Laundering (AML) encompasses the laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.
AML Program Components
| Component | Purpose |
|---|---|
| KYB/KYC | Verify customer identities |
| Transaction Monitoring | Detect suspicious patterns |
| Sanctions Screening | Check against prohibited parties |
| Suspicious Activity Reporting | Report potential crimes to authorities |
| Risk-Based Approach | Allocate resources by risk level |
Regulatory Framework
United States
- Bank Secrecy Act (BSA): Primary AML law
- FinCEN: Enforcement agency
- Corporate Transparency Act: Beneficial ownership reporting
International
AML/CFT
AML is often paired with CFT (Combating the Financing of Terrorism) as “AML/CFT” because detection methods overlap. Both rely on:
- Customer identification
- Transaction monitoring
- Sanctions screening
- Suspicious activity reporting
Why AML Matters for KYB
KYB is a critical AML control—verifying business customers prevents shell companies from being used to launder money. AML obligations drive beneficial ownership identification requirements.