What is Anti-Money Laundering (AML)
Anti-Money Laundering (AML) involves a series of laws and regulations that prevent the illicit flow of money around the world. Money laundering relates to the procedure of disguising (illegally obtained) cash from a pattern of transferrals or transactions which is usually complicated. These transactions are commonly legitimate and would therefore not be reported, which would allow the rightful owner of the unlawful funds to use the funds for legal purposes.
AML is targeting criminal activities such as illegal buying and selling of goods (drugs, smuggling, etc.), corruption, and tax fraud in government positions, to name but a few. It specifically addresses methods that mask these crimes and the money they have received.
AML plays an important role for financial institutions. In the absence of profitable movements of the revenue of those illegal acts by criminals, these crimes would not be encouraged. Financial institutions are therefore designed to check customer transactions and records of deposits, particularly as they tend to be bigger than average.