AML (Anti-Money Laundering)
The laws and procedures meant to stop criminals from disguising illicit money as legitimate funds.
Anti-Money Laundering is the broad framework; KYC is one tool inside it. Exchanges must monitor transactions for suspicious patterns and file reports with regulators. Blockchain analytics firms like Chainalysis trace funds across the chain to support this work.
Crypto's transparency cuts both ways here. Every transaction is public and permanent, which makes tracing easier than with cash — but mixers, privacy coins, and cross-chain bridges are used to break the trail. Enforcement has tightened sharply, with mixers like Tornado Cash drawing sanctions.
Related terms
The identity checks financial firms run to confirm who their customers are before opening accounts.
Custodial WalletAn account where a third party holds your private keys for you, like a bank holding deposits.
CeFi (Centralized Finance)Crypto services run by companies that hold your funds and keys, much like a bank or traditional broker.
TransactionA signed instruction that moves value or data on a blockchain, recorded permanently once miners or validators confirm it.