Anti-money laundering (AML) refers to the laws, regulations, and policies to meet compliance with legal requirements to prevent financial crimes.
Understanding of the term
Financial crimes involving money laundering include the illicit transfer of funds into the financial system. This involves:
(i) conversion of or transfer of property that is part of crime proceeds
(ii) a misrepresentation of source, ownership, identity, or location regarding property
(iii) ownership, possession, or use of property, being aware of the proceeds of crime at the time of receipt.
Anti-money laundering is the execution of transactions to convert illegally acquired funds into legal money. This usually involves using data and analytics to detect suspicious activities. Among the practices targeted are market manipulation, tax evasion, securities fraud, illegal goods trading, and other forms of financial corruption.
In cryptocurrencies, AML involves practices, laws, and regulations to prevent or stop criminals from converting illegally acquired cryptocurrencies into fiat currency. Effective AML procedures in cryptocurrency businesses can prevent scams from getting underway.