What does AML stand for in banking?

In the context of banking, AML stands for Anti-Money Laundering. This term refers to the set of laws, regulations, and procedures that financial institutions and governments implement to prevent illicit activities related to money laundering. Money laundering is the process of making illegally obtained money (i.e., dirty money) appear legitimate (i.e., clean money).

The importance of AML practices lies in their role in maintaining the integrity of the financial system, preventing crime, and protecting institutions from being used for fraudulent purposes. Financial institutions are required to monitor and report suspicious transactions, conduct due diligence on their customers, and implement internal controls to detect and prevent money laundering activities. Thus, understanding and implementing AML measures is critical for compliance in the banking sector as well as for contributing to overall financial security.