Crypto glossary
AML (anti-money laundering)
AML, or anti-money laundering, is the set of laws and controls requiring financial and crypto firms to detect and report attempts to launder illicit funds.
AML rules oblige regulated firms to identify their customers through KYC, monitor transactions for suspicious patterns, screen against sanctions lists and file reports with financial intelligence units. International standards are set by the Financial Action Task Force (FATF), which brought crypto service providers under its recommendations in 2019.
One of the most relevant rules for crypto is the travel rule, which requires exchanges to send sender and recipient information along with transfers above certain amounts. The EU applies it to all crypto transfers between providers, with no minimum threshold, since 30 December 2024.
Exchanges also use blockchain analytics to trace funds linked to hacks, scams or sanctioned addresses. Failures can be costly: Binance agreed in 2023 to pay about $4.3 billion to US authorities over AML and sanctions violations.
Example
A user deposits crypto into an exchange from an address that analytics tools link to a recent hack. The exchange's AML system flags the deposit, freezes the funds and files a suspicious activity report.
Related terms
Latest articles on AML
- Block Reaches $764M DOJ AML Deal in Principle
- FATF Launches Targeted Review of Crypto AML Gaps
- India’s Financial Crime Watchdog Targets Offshore Crypto Platforms For AML Rule Violations
- New AML law sets Costa Rica crypto registration deadline
- Ripple CTO Defends Tether’s $42M Freeze Amid Major AML Lawsuit
