What does 'AML' stand for in banking regulation?

In banking regulation, AML stands for Anti-Money Laundering. The term covers laws, regulations, policies, and procedures designed to stop criminals from disguising illegally obtained money as legitimate funds.

Money laundering is commonly described in three stages: placement, layering, and integration. Placement introduces illicit money into the financial system; layering obscures its origin through transactions; integration returns it to the economy in apparently lawful form. Banks therefore monitor transactions, verify customer identities, maintain records, and report suspicious activity to relevant authorities.

AML controls are closely connected to “know your customer” (KYC) and customer due diligence. KYC helps a financial institution establish who a customer is and, where required, understand the customer’s business, ownership structure, and expected activity. AML is broader than KYC: identity checks are one tool within the wider anti-money-laundering framework.

AML is also distinct from “asset-liability management,” another banking acronym, which concerns interest-rate risk, liquidity, and the balance between a bank’s assets and liabilities. The “M” in AML here means money, not market or management.