AML (Anti-Money Laundering)

What is AML?

AML, also known as anti-money laundering prevention, refers to the set of rules, procedures, and controls that companies (especially financial institutions and payment service providers) implement to prevent, detect, and report activities related to money laundering and terrorist financing.

The main objective is to ensure that funds circulating through the financial system come from lawful activities and are not used to conceal illicit capital.

How do AML controls work?

AML controls consist of a series of coordinated actions to assess risks and continuously monitor all transactions. The most common elements include:

Identity verification

Collection and confirmation of customer data (name, identity document, address) and company data (legal registration, ownership structure).

Risk assessment

Analysis of the risk level of each customer or entity based on their profile and activity. Customer Due Diligence (CDD) helps identify factors such as:

• Type of business
• Geographic location
• Intended use of the product or service
• Source of funds

Enhanced due diligence (EDD)

For customers considered high risk, the collected information is further analyzed through:

• Verification of the origin of the customer’s funds
• Review of documents proving the customer’s financial situation
• Investigation of negative information about the customer in news or public databases
• Approval from senior management before proceeding with the operation

Ongoing monitoring

Continuous supervision of transactions and behavioral patterns to detect unusual or suspicious activity, such as:

• Volume spikes or irregular patterns
• Transfers to high-risk jurisdictions
• Splitting large amounts to avoid detection

Reporting suspicious activities

Notification to the competent authorities of any signs of money laundering or terrorist financing. For example, in the European Union, this would be the local financial intelligence units.

Why are AML controls important?

• They protect the financial system from illicit funds
• They prevent legal and regulatory sanctions for non-compliance
• They maintain the trust of partners, customers, and financial institutions
• They reduce fraud and operational risks by detecting suspicious financial patterns