What is AML? Anti-Money Laundering Explained

AML stands for Anti-Money Laundering. It refers to the set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML compliance is a legal requirement for financial institutions, fintech companies, crypto exchanges, and many other businesses globally.

AML compliance typically includes customer due diligence (CDD), which involves verifying customer identities and understanding the nature of the business relationship; transaction monitoring, which involves reviewing customer transactions for suspicious activity; and sanctions screening, which involves checking customers against government watchlists such as OFAC and the UN sanctions list.

For crypto businesses and Web3 projects specifically, AML requirements have significantly increased in recent years. The Financial Action Task Force (FATF) Travel Rule, which requires virtual asset service providers to share customer information when transferring digital assets, has placed AML obligations on a wide range of crypto businesses that previously operated without formal compliance frameworks.