Anti-Money Laundering (AML)

Anti-money laundering (AML) refers to a set of guidelines that prevents illegal income from being disguised as legitimate earnings. In cryptocurrency, it covers any preventive measures designed to inhibit criminals from converting illegally obtained cryptocurrencies into fiat, and vice versa.

To stay ahead of this, many cryptocurrency firms have dedicated departments to track fraudulent activity and address them as soon as possible. Accordingly, processes like ‘Know Your Customer’ (KYC), ‘Customer Due Diligence’ (CDD), and the ‘PEPs list’ serve as a radar for suspicious transactions. These operations help ensure that law enforcement has the means to trace crimes back to the source.

Many authoritative bodies and pieces of legislation help to provide general guidelines and resources for broker-dealers and futures commission merchants to define their AML standards. In the US, these agencies are the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).