Anti-Money Laundering (AML) refers to the entire framework of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained money as legitimate income. Money laundering is the process by which proceeds from crime — such as drug trafficking, fraud, or corruption — are made to appear as if they come from a lawful source, typically by passing them through a series of financial transactions. Such activities are generaly divided into three stages: Placement, Layering and Integration.
AML rules require banks, financial institutions, and many other businesses, generally called obliged entities, to detect, prevent, and report such activity to the relevant authorities. The AML framework is primarily built around the Anti-Money Laundering Directives (EU), The Bank Secrecy Act (USA), or other national legislation which set binding rules for AML. These laws impose obligations on a wide range of “obliged entities” — including banks, insurance companies, accountants, lawyers, and real estate agents — to put in place systems and controls that identify and stop money laundering. Non-compliance can result in significant fines and, in serious cases, criminal liability.
