What does AML stand for in the context of banking compliance?

In the context of banking compliance, AML stands for Anti-Money Laundering. This term refers to the procedures and regulations that financial institutions must implement to prevent, detect, and report the conversion of illegally obtained funds into legitimate assets. Money laundering typically involves a series of transactions that obscure the original source of the money, making it essential for banks to have robust measures in place to combat this illegal activity.

The significance of AML practices lies in their role in maintaining the integrity of the financial system, protecting institutions from being unwittingly involved in criminal activities, and ensuring compliance with national and international laws. Strong AML protocols include customer due diligence, transaction monitoring, and suspicious activity reporting. These measures help banks identify and mitigate risks associated with money laundering and related financial crimes.