Anti-Money Laundering (AML) - what is it?

AML (Anti-Money Laundering) verification is a process aimed at identifying and preventing money laundering and terrorist financing. This concept applies to both the fiat financial system and the cryptocurrency one. Due to the specifics of the development of the cryptocurrency sector, the emphasis has been placed on it in the last few years in terms of AML parameters.

How does the AML system work?

Since all participants in the cryptocurrency niche are anonymous, and transactions are carried out on non-refundable conditions, attackers actively take advantage of this. Through digital coins, it is possible to hide illegally obtained funds to legalize them ultimately. Due to specific difficulties in identifying and tracking ways to get financial assets, a particular AML system was developed.

The main methods of money laundering through the cryptocurrency sector:

  • use of anonymous services through which various cryptocurrencies are bought and sold;
  • creation of fake platforms for exchanging and trading cryptocurrencies;
  • buying and selling digital coins with the highest level of anonymity.

Unique verification methods are used to simplify the procedure for controlling the origin of funds. AML allows you to neutralize fraudsters' actions using the above techniques to achieve transparency in financial reporting.

AML - specificity in action

Since the problem of money laundering through cryptocurrency has become very acute in the last few years, the following steps are performed when checking AML:

  • updating information about clients - this rule is followed by the owners of services that are connected to AML, as a result of which data is collected about clients and the transactions they carry out over a certain period;
  • clarification of potential risks - the emphasis may be on specific regions or countries, and the amount of money carried out tracking; there is also clustering by type of business;
  • financial monitoring - based on clear regulations, all customer transactions are monitored; if there are signs of suspicious activity or fraud, a deeper check is carried out on the client and the origin of funds.

The AML system allows you to instantly respond to suspicious transactions and perform technically competent analysis based on many factors and criteria. As a result, AML identifies standard patterns of customer behavior and reveals typical fraud schemes.