Money laundering, when money obtained illegally is made to appear legitimate, is a significant global problem. To tackle it, there are significant anti-money laundering or AML efforts, such as global laws, procedures, and regulations designed to detect evidence of money laundering.
Who enforces AML?
AML procedures are enforced by regulatory bodies. These include international bodies such as the Financial Action Task Force or FATF. Many countries also have their own regulatory bodies that oversee financial institutions. In the UK, this is the Financial Conduct Authority or FCA. They are a regulatory body that supports competition, safeguards customers, and enforces AML with a range of penalties for those financial companies that are not compliant. If you work in finance and are unsure if your company meets all FCA regulations, it is worth using the services of FCA compliance consultants like adempi.co.uk to make sure you are on the right side of the law.
How AML works
Financial regulatory bodies use processes like ‘Know Your Customer’ or KYC and ‘Customer Due Diligence’ or CDD to identify and mitigate money laundering activities. These are checks on the identities of new customers to determine whether their funds have come from a legitimate source.
Money laundering regulations are continually evolving to take account of the current financial landscape. In recent years, cryptocurrency has proved a significant challenge due to the lack of regulations. In the US, the Anti-Money Laundering Act of 2020 subjected cryptocurrency exchanges to the same due diligence laws as other currencies, while the FATF introduced a framework for sharing information on cryptocurrency transfers across borders.