Anti-Money Laundering (AML)

AML rules place duties on banks, insurers, securities firms, payment providers and certain other businesses. They must identify customers, understand where funds come from, watch for unusual activity and report suspicions to a financial intelligence unit. Behind these duties sits a criminal offence of laundering and powers to freeze and confiscate proceeds. The global standard comes from FATF, which countries turn into national law and which assessors test in mutual evaluations. The term is frequently written AML/CFT because the same controls also help detect funds meant to finance terrorism, even though those funds may be clean at source. Practitioners meet AML in onboarding checks, alert queues, regulatory examinations and fines. Weak controls let crime pay, expose firms to heavy penalties and can cut a country off from the global financial system.

Opening a file on a property developer, a private bank's compliance team verifies identity, records who owns the company, asks where the investment funds came from and sets a higher monitoring level because of the cash-heavy sector. Months later, unusual cash deposits trigger a review, and the bank files a suspicious transaction report.