GlossaryTerm · Regulation

What does AML mean?

By Tokenova Editorial Desk

The rules that turn banks and payment firms into lookouts for criminal money.

3 sources ↓
A thick stack of US hundred-dollar bills
Photo: “Money - Flickr - AMagill” by Andrew Magill from Boulder, USA, CC BY 2.0 (edited: cropped, colour-graded)

Quick answer

AML stands for anti-money laundering: the laws, rules and controls that stop criminals disguising the illegal origin of their money. Banks and other firms must know their customers, monitor activity and report suspicious transactions to the authorities⁠[1]⁠[2].

Key points

  • Money laundering is processing criminal proceeds to disguise their illegal origin.
  • AML rules require customer checks, transaction monitoring, record-keeping and reporting.
  • Global standards come from the FATF; countries turn them into national law, such as the US Bank Secrecy Act.
On this page
  1. What does AML cover?
  2. How big is money laundering?
  3. How is AML related to KYC and sanctions?
  4. FAQ
  5. Sources

#What does AML cover?

The FATF, the intergovernmental body that sets global standards, defines money laundering as the processing of criminal proceeds to disguise their illegal origin, typically in three stages: placement, layering and integration⁠[1]. AML is everything aimed at preventing and detecting that. In the US, the Bank Secrecy Act of 1970 authorises the Treasury to impose reporting and other requirements on financial institutions, including reports of cash transactions over $10,000 and of suspicious activity⁠[2]. The full picture is in anti-money laundering explained.

Worked example

Example

A fraudster receives stolen money into an account opened with a borrowed identity (placement), sends it through several accounts and countries (layering), then uses it to buy a car that is later sold for 'clean' cash (integration). AML controls try to break this chain: identity checks at account opening, monitoring that flags the rapid transfers, and a suspicious activity report to the authorities.

#How big is money laundering?

Nobody knows exactly, because it is hidden. The UN Office on Drugs and Crime estimates 2–5% of global GDP, or $800 billion to $2 trillion a year⁠[3]. Treat that as a rough order of magnitude.

#How is AML related to KYC and sanctions?

KYC (know your customer) is the identity-checking part of AML. Sanctions screening is a related but separate duty: checking names against government lists of people whose assets must be frozen. Many firms run all three with regtech software.

Frequently asked questions

What does AML/CFT mean?

Anti-money laundering and countering the financing of terrorism. The FATF sets standards for countering both⁠[1], which is why the two labels usually appear together.

Is depositing a lot of cash an AML problem?

Not by itself. In the US, banks simply report cash transactions over $10,000⁠[2]; deliberately splitting deposits to avoid that report is what the law forbids.

Sources

  1. Frequently asked questions: money laundering — Financial Action Task Force (FATF), 2026 Primary
  2. The Bank Secrecy Act — Financial Crimes Enforcement Network (FinCEN), 2026 Primary
  3. Money laundering — overview — United Nations Office on Drugs and Crime, 2026 Primary

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