Quick answer
AML refers to controls designed to prevent and detect money laundering and related financial crime.
What is AML?
Anti-money-laundering, or AML, describes policies and controls used to identify suspicious activity, verify customers, monitor transactions, and report certain activity under applicable law.
The useful way to approach this term is to separate its definition from the assumptions people often attach to it. In crypto, the same word can appear in a protocol rule, a user interface, a market-data label, or a marketing claim. Check which layer the explanation is describing.
Why does aml matter?
AML controls can affect account reviews, transaction holds, source-of-funds questions, and access to services. The requirements differ across jurisdictions and do not make every platform equally safe.
Concrete example
See it in a real situation
A service may review a deposit pattern that does not match a customer’s profile and ask for information about the source of funds.
Common misconceptions
What this term does not mean
- AML is not the same as blockchain transaction privacy.
- An AML check is not a guarantee that an asset or counterparty is legitimate.
Related terms
Sources and further reading
Definitions are written for education and checked against the sources below where relevant. A source can explain a protocol or rule without endorsing every product built around it.