Anti Money Laundering (AML)

By WILL KENTON
 Reviewed By SOMER ANDERSON 
 Updated Jul 7, 2020'

https://www.investopedia.com/terms/a/aml.asp

What Is Anti Money Laundering (AML)?

Anti-money laundering (AML) refers to a set of laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income. Though anti-money-laundering laws cover a relatively limited range of transactions and criminal behaviors, their implications are far-reaching.

For example, AML regulations require that banks and other financial institutions that issue credit or allow customers to open deposit accounts follow rules to ensure they are not aiding in money-laundering.

KEY TAKEAWAYS

• Anti Money Laundering (AML) seeks to deter criminals by making it harder for them to hide ill-gotten money.
• Criminals use money laundering to conceal their crimes and the money derived from them.
• AML regulations require financial institutions to monitor customers' transactions and report on suspicious financial actiivity.

History of Anti Money Laundering

Anti-money-laundering initiatives rose to global prominence in 1989, when a group of countries and organizations around the world formed the Financial Action Task Force (FATF). Its mission is to devise international standards to prevent money laundering and to promote the implementation of those standards. In October 2001, shortly after the 9/11 terrorist attacks on the United States, FATF expanded its mandate to include efforts to combat terrorist financing.

Another important organization involved in the fight against money laundering is the International Monetary Fund (IMF). Like the FATF, the IMF has also pressed its 189 member countries to comply with international standards to thwart terrorist financing.

Sources:

FATF REPORT
Virtual Currencies
Key Definitions and
Potential AML/CFT Risks