Course Content
What Is Anti-Money Laundering (AML)?
AML regulations attempt to stop the illegal laundering of illicit funds. Individual governments and multinational organizations like the FATF legislate against money laundering activities. Money laundering takes “dirty” money and turns it into clean money. This can be done by disguising the origins of the funds, mixing them with legitimate transactions, or investing them into legal assets. Crypto is an attractive way to launder money due to its privacy, difficulty in retrieving funds, and underdeveloped legislation. Large-scale seizures of crypto show criminals regularly use it to launder huge sums. Binance and many other crypto exchanges track suspicious behavior as part of their AML compliance and report it to law enforcement.
What Is Anti-Money Laundering (AML)?
About Lesson

There are multiple ways to achieve the three steps above. A traditional method has been to create fake receipts for cash-based services in shops, restaurants, and other businesses. An individual or organization uses the businesses as fronts for money laundering. Criminals create counterfeit receipts and pay for them with “dirty” physical cash, turning them into legitimate income. This inflow is then mixed in with genuine transactions to make it difficult to distinguish between the two.

However, it’s now common for illegitimate funds to be digital rather than physical cash. This difference changes the methods used to launder money. There are now even more options to hide and wash “dirty” money than before. For example, you can directly transfer money without the use of a bank. Payment networks like Paypal or Venmo provide another layer for launderers to use and regulators to monitor.

Anonymizing technology such as VPNs and cryptocurrencies makes the situation even more challenging. Pinning down a specific individual to laundering activity can be impossible. One method to fight this has been tracking crypto “to the edge.” By following a blockchain “paper trail” to an exchange, you can tie the laundered funds to a crypto exchange account or bank account under someone’s name. However, purchasing crypto in cash or through peer-to-peer services makes tracking the entrance or exit of dirty money into the financial system difficult.

Another favored method is to use online gambling sites. Criminals deposit the money they want to launder in an online gambling account. They then proceed to place bets to make the account look legitimate. Finally, they remove their funds and end up with clean money. Typically this is done with multiple accounts as not to arouse suspicion. A single account with large amounts of funds might flag up an AML check.