Anti-Money Laundering (AML) refers to a set of laws, regulations, and procedures designed to prevent money laundering activities, which involve concealing the origins of illegally obtained money. AML regulations are used by financial institutions to monitor, detect, and report suspicious financial transactions.
What Does It Mean?
- Prevention of Illegal Activity: AML ensures that money derived from criminal activities like fraud, drug trafficking, and corruption is not introduced into the financial system.
- Compliance Requirements: Financial institutions must establish processes to detect and report suspicious activities to regulatory authorities.
- Risk Management: By adhering to AML laws, businesses protect themselves from becoming complicit in criminal activities.
Why Is It Important?
- Protects the Integrity of Financial Systems: AML ensures that the financial system is not misused for illegal purposes.
- Fights Crime: It is a crucial tool in the global fight against money laundering, terrorism financing, and organized crime.