Anti-Money Laundering (AML) refers to a set of laws, regulations, and procedures that financial institutions and other regulated companies must follow to prevent, detect, and report money laundering activities. The goal of AML regulations is to prevent criminals from using financial systems to launder the proceeds of illegal activity, such as drug trafficking, fraud, and corruption, and to detect and deter money laundering activity that may be used to finance terrorism.
AML compliance typically involves implementing internal controls and procedures to detect and report suspicious activity, such as monitoring customer transactions for patterns indicative of money laundering, filing suspicious activity reports (SARs) with the relevant authorities, and conducting customer due diligence. Financial institutions and other regulated companies are also required to have an AML compliance program which includes:
- Establishing and maintaining an AML policy and procedures
- Designating a compliance officer
- Providing AML training for employees
- Implementing customer identification and verification procedures
- Periodic review of the program
The specific AML requirements can vary depending on the jurisdiction and the nature of the business but the general aim is to prevent financial systems from being used to launder the proceeds of illegal activity and/or fund illegal activities.
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