What is Anti-Money Laundering (AML)
Anti-Money Laundering (AML) involves a series of laws and regulations that prevent the illicit flow of money locally and globally. Money laundering relates to the procedure of disguising cash origin from illegal activities by conducting a complicated and irregular sequence of transfers or transactions. These transactions are commonly legitimate and would not, therefore, be reported, allowing the rightful owner of the unlawful funds to use the funds for legal purposes.
AML targets 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 addresses methods that mask these crimes and the source of the money.
AML laws play a crucial role in the traditional financial system. In the absence of profitable movements of the revenue of illegal acts by criminals, these crimes would not be encouraged. Financial institutions must check customer transactions and records of deposits, particularly as they tend to be larger than average.