Anti-Money Laundering (AML)

What it is

AML is the body of regulation, controls and operational practice that obliges financial institutions to detect and report transactions that appear linked to the proceeds of crime. Money laundering itself is the act of moving illicit value through the financial system to obscure its origin so that it can be used as if it were lawful.

The classical three stages

• Placement. Cash from a predicate offence enters the financial system — through deposits, money services, gambling proceeds, sham invoices and similar.
• Layering. Value is moved through multiple transactions, jurisdictions and entities to break the audit trail back to its origin.
• Integration. The now-disguised value is invested into the legal economy — real estate, businesses, financial instruments — and used as if it had always been clean.

How it works in practice

AML programmes combine customer due diligence (KYC/CDD/EDD), continuous transaction monitoring, sanctions and PEP screening, and the filing of Suspicious Transaction Reports (STRs) with the national Financial Intelligence Unit (FIU). Industry surveys consistently report 90–99% false-positive rates in rule-based monitoring — most of the cost of an AML programme is the work of investigating alerts that lead nowhere.