Anti-Money Laundering (AML) refers to a set of regulations, laws, and procedures designed to prevent and detect activities related to money laundering and terrorist financing. Money laundering is the process of making illegally obtained funds appear legal by disguising their true origin, while terrorist financing involves providing financial support to individuals or groups engaged in terrorism.

The objective of AML measures is to ensure that financial institutions, such as banks, credit unions, and other entities engaged in financial transactions, have robust systems in place to identify and report suspicious activities that may indicate money laundering or terrorist financing. By doing so, these measures aim to deter criminals from using the financial system for their illicit activities and disrupt their ability to benefit from the proceeds of crime.

AML regulations require financial institutions to implement various practices, including customer due diligence (CDD), which involves verifying the identity of customers, assessing their risk profiles, and monitoring their transactions for unusual patterns or behaviors. Enhanced due diligence may be applied to higher-risk customers, such as politically exposed persons (PEPs) or those in sectors susceptible to money laundering.

Financial institutions are also required to establish internal controls, policies, and procedures to detect and report suspicious transactions. They must appoint a designated compliance officer responsible for overseeing AML efforts and ensure their staff receives training on AML regulations.