Anti-money laundering, or AML, comprises laws, controls and operating procedures intended to prevent, detect and report the movement of criminal proceeds. Obligations vary by jurisdiction and regulated activity, but commonly cover customer due diligence, monitoring, recordkeeping and regulatory reporting.
What does an AML program include?
- Risk assessment and written controls
- Customer and beneficial-owner identification
- Sanctions and adverse-media screening
- Transaction monitoring and investigation
- Suspicious-activity escalation and reporting
- Training, independent testing and record retention
How does a risk-based approach work?
A business assesses the customer, products, channels, countries and transaction patterns relevant to its exposure. Higher-risk relationships receive stronger evidence, review or monitoring. Risk classification should guide controls without replacing mandatory legal requirements.
AML vs. KYC
Know Your Customer (KYC) focuses on identifying and understanding the customer. AML is the broader control framework in which KYC operates, alongside monitoring, investigation, reporting and governance.
What should not be inferred?
A screening alert or unusual transaction is not automatically proof of money laundering. It is a signal that requires documented review against the customer and transaction context. Conversely, a cleared alert does not remove the need for ongoing monitoring.
