Definition
AML, short for Anti-Money Laundering, is a regulatory and compliance framework aimed at stopping criminals from disguising illegally obtained funds as legitimate income. It encompasses legal requirements, monitoring standards, and reporting obligations imposed on financial institutions and crypto service providers. In the digital asset space, AML focuses on tracking and analyzing transactions to identify patterns that may indicate money laundering, terrorist financing, or other financial crimes. AML obligations often interact closely with KYC processes and broader financial regulation.
Within crypto markets, AML requirements typically apply to centralized intermediaries such as a CEX, fiat on-ramp providers, and other regulated entities that handle customer funds. These entities must implement controls to monitor flows between crypto assets, stablecoin positions, and traditional fiat currencies. AML as a concept defines the expectations for how financial actors should identify suspicious activity and cooperate with regulators and law enforcement. It serves as a foundational security and compliance layer that links crypto markets with the traditional financial system.
Context and Usage
AML is used as an umbrella term for the policies, internal procedures, and technical systems that institutions adopt to comply with anti-money laundering regulation. In practice, it shapes how customer onboarding, transaction screening, and reporting are structured at a CEX or fiat on-ramp. AML requirements influence how stablecoin issuers and related service providers manage wallet addresses, redemption flows, and interactions with the banking system. As a concept, AML defines the compliance environment that governs how crypto platforms interface with KYC rules and the broader regulated financial ecosystem.