Glossary · compliance and risk
What is AML?
AML, anti-money laundering, is the framework of law and process that stops financial systems being used to disguise the origin of criminal money. For a payment provider it is not a department, it is a licence condition.
The parts a merchant actually meets
AML is an umbrella. Underneath it sit the specific processes that show up in a payments relationship, and it is more useful to know those than the umbrella.
Customer due diligence is verifying who you are dealing with, which for a business account means KYB and KYC on the individuals. Transaction monitoring is watching for patterns that do not fit. Sanctions screening is the prohibition check that allows no discretion. Source of funds enquiries are what happens when monitoring raises something.
In crypto there is a fifth element with no direct banking equivalent: blockchain analytics. Because transaction history is public, a provider can trace where funds have been, which makes some checks stronger than their banking counterparts and occasionally surfaces history nobody involved knew about.
None of this is a burden you carry as a merchant on payments processed through a licensed provider. What you carry is the obligation to answer when asked, and the practical need to have records good enough to answer with.
Your part in it
Three things, all of which are ordinary good practice.
Keep retrievable records
Order detail by date range. This answers most requests without drama.
Frequently asked questions
Am I responsible for AML as a merchant?
For payments processed through a licensed provider, that firm carries the obligation. What you owe on top of that is a question for your own regulator and your own counsel, not for a glossary.
What triggers an AML enquiry?
Activity that does not fit the expected pattern, or on-chain history that warrants explanation. Both are common and neither is an accusation.
Is crypto worse for AML than banking?
Different rather than worse. Transaction history is public, which makes tracing easier than in cash or correspondent banking. Identity is not attached to an address, which makes attribution harder.
Why do our older blog posts on this look dated?
Because they predate MiCA. The EU framework changed materially, and anything written before it should be read with that in mind.