AML (anti-money laundering)
Also called: AML · anti-money laundering · AML/CFT
Definition
AML (anti-money laundering) is the set of laws and internal controls that financial firms, including crypto exchanges, use to detect and prevent illegal funds from entering the system.
This entry is shown in English.
How AML works
AML covers more than identity checks. It includes customer due diligence, ongoing transaction monitoring, sanctions screening, record keeping and reporting suspicious activity to authorities. KYC is the first step; AML is the whole programme around it. It often appears together with CFT, countering the financing of terrorism.
In crypto, exchanges use blockchain analytics to score incoming deposits. Funds linked to hacks, sanctioned addresses, darknet markets or certain mixers may be flagged. A flagged deposit can lead to questions about the source of funds, a temporary hold, or in serious cases a frozen account while the exchange investigates.
For ordinary users, AML mostly shows up as checks you can prepare for: being asked where your money came from, why you are sending large amounts, or who you are trading with on P2P. The international standards come from the FATF, and each country turns them into its own rules, so procedures vary by exchange and region.
Example
Suppose you receive 8,000 USDT from a P2P buyer and deposit it to a centralized exchange. The exchange's analytics tool shows that 2,000 USDT of it passed recently through an address linked to a reported scam. That is 25% of the deposit. The exchange places a hold on the 8,000 USDT and asks for your P2P order history and chat records. Providing clear records helps the review, but the outcome depends on the exchange's policy.
Common mistakes
- Accepting P2P payments from third parties whose names do not match the buyer's account.
- Ignoring a source-of-funds request, which often leads to longer holds.
- Routing funds through mixers or unknown wallets to look private, which can trigger AML flags.
Learn and practise
FAQ
What is the difference between KYC and AML?
KYC is verifying who a customer is. AML is the broader programme that includes KYC plus monitoring transactions, screening sanctions and reporting suspicious activity.
Why was my crypto deposit frozen for AML review?
The exchange's monitoring likely linked the funds or the transaction pattern to a risk. Respond through official support with documents showing where the funds came from.