Anti-money laundering (AML) refers to a set of laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), and the Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) aim to prevent money laundering and the financing of terrorism by imposing a number of obligations.
These obligations include collecting and verifying certain information (KYC) about a customer’s identity when providing those services. Financial institutions are even required to monitor customers’ transactions and report on anything suspicious.
AML vs. KYC
There is a difference between AML and KYC (Know Your Customer).
KYC is the process that institutions must take in order to verify their customer’s identities before providing services. For instance, every time you go to the banks, they would first ask you a couple of questions to confirm you are the valid account holder before assisting with your enquires. AML operates on a much broader level and are the measures that institutions take to prevent and combat money laundering, terrorism financing, and other financial crimes.
