The term AML stands for Anti-Money Laundering. It refers to a set of policies, procedures, and regulations that financial institutions and other regulated entities must follow to prevent, detect, and report money laundering activities. Money laundering is the process of making illegally obtained money appear legitimate by disguising its origins through a series of transactions.

Key Components of AML

1. Customer Due Diligence (CDD): Verifying the identity of customers and assessing their risk of involvement in money laundering.
2. Transaction Monitoring: Continuously monitoring customer transactions to identify suspicious activities.
3. Suspicious Activity Reporting (SAR): Reporting suspicious transactions to relevant authorities.
4. Record Keeping: Maintaining records of customer identification, transaction history, and SARs for a specified period.
5. Compliance Programs: Implementing internal AML policies and procedures, including employee training and appointing a compliance officer.
6. Regulatory Reporting: Complying with national and international AML regulations and undergoing regular audits and reviews.

AML measures are crucial for maintaining the integrity of the financial system and preventing the misuse of banking services for illegal activities.