AML

AML (anti-money laundering) is the set of measures against money laundering: checking customers, monitoring suspicious transactions and reporting them. Banks and crypto services must apply it.

How it works

Laundering is the attempt to make illegally obtained money look clean. AML rules make that harder: companies verify customers' identity (KYC), screen them against sanctions lists, watch for unusual activity and report suspicious cases to the authorities.

In crypto AML is very visible because blockchains are public. Services use blockchain analytics to see whether incoming coins are linked to fraud, hacks, darknet markets, sanctioned addresses or mixers. Such coins can be held until the question is cleared.

For a regular user, AML means verification, sometimes questions about where your money came from, and delays on unusually large or odd transactions. Requirements differ by country, but the basic principles are similar because they follow FATF standards.

Example with numbers

You sell 0.2 BTC on P2P to a stranger who pays you. A week later you move the money to your bank and the account is frozen: the payment came from a fraud victim's card. The bank asks for an explanation, and you cannot use the money while it reviews the case.

Common mistake

A mistake is taking an AML check personally and trying to get around it: splitting amounts, lying about where money came from, using someone else's account. That makes you look more suspicious and can get the account closed. It is better to calmly provide documents: statements, trade history, an explanation. And do not accept money from strangers you cannot check.

Questions and answers

What is AML in simple terms?

It is the set of rules that makes banks and crypto services check customers and report suspicious money, so criminals cannot launder it.

What is the difference between AML and KYC?

KYC is part of AML: checking who the customer is. AML is wider and includes transaction monitoring, sanctions screening and reporting.

Why did an exchange freeze my deposit for AML?

Usually because the coins are linked to a suspicious address on the blockchain or the transaction is unusual for you. You are typically asked to explain and document where the funds came from.

AML

How it works

Questions and answers

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