What is Anti-Money Laundering?

Anti-Money Laundering is an illegal practice that affects both fiat money as well as cryptocurrencies. For digital currency or cryptocurrency, anti-money laundering (AML) is a law or rule to prevent money laundering via the exchange of cryptocurrency.

What does AML mean in crypto?

The regulatory bodies have implied laws and regulations that prevent money launders from turning cryptocurrency into cash illegally.

Example of how money laundering work

Suppose a man who is a drug dealer, and is earning millions of money as cash from that illegal work, now how does he show this money to the government?

The drug dealer buys bitcoin cryptocurrency where he does not need to show any bank detail or do not need to do any type of KYC which help the drug dealer use that black money in investing into cryptocurrency, that is the reason bitcoin is more used by criminals for money laundering.

Prevention of Money Laundering Act 2002

This act is started for the prevention of money laundering. Their main aim is to stop money laundering and seize the user accounts of people who do illicit activities for converting their black money into white money.

Financial Action Task Force (FATF) is a force that develops the Anti-Money laundering regulation for making the crypto industry a safe place and they keep watching that investment should be done on cryptocurrency with a legal source.

According to the report over 30% of the increase in comparison to the previous year over $8.5 billion in cryptocurrency is transferred from illegal addresses.

Final Thoughts

As digital transactions have become popular these days, Government around the world putting their efforts to combat money laundering activities. There is a special force Financial Action Task Force (FATF) for keep watching their activities to prevent crimes. The FATF community monitors countries to ensure they implement the FATF Standards effectively.