Anti-money laundering (AML)
The laws, controls and programs that financial institutions use to detect and prevent money laundering and terrorist financing.
What anti-money laundering is
Anti-money laundering (AML) covers the rules and controls that aim to stop criminals from disguising illegal funds as legitimate money. In the US, the Bank Secrecy Act (BSA) is the core AML law. It requires banks and other covered institutions to run AML programs and report suspicious activity to the Financial Crimes Enforcement Network (FinCEN).
How it works
A bank's AML program includes internal controls, independent testing, a designated BSA officer, training and risk-based customer due diligence, including know your customer (KYC) checks. Transaction monitoring flags unusual activity for review, and sanctions screening against Office of Foreign Assets Control (OFAC) lists runs alongside it.
- 01 · ONBOARD Customers are identified, verified and risk-rated at account opening.
- 02 · MONITOR Transactions are monitored, and unusual patterns are investigated.
- 03 · REPORT Suspicious activity is reported to FinCEN, and records are kept.
| Stage | What happens | Example |
|---|---|---|
| Placement | Illegal cash enters the financial system | Deposits split into small amounts |
| Layering | Funds move through transfers to hide their source | Rapid transfers across accounts and countries |
| Integration | Funds reenter the economy looking legitimate | Purchases of property or businesses |
AML controls look for signs of each stage in customer and transaction data.
Who must comply
- Banks, savings associations and credit unions
- Money services businesses (MSBs), broker-dealers, casinos and insurers with covered products
- Fintechs with sponsor banks, under contract terms, and directly if they are MSBs
- Investment advisers, under a FinCEN rule now delayed to 2028
Cross River's compliance management system includes KYC and know your business (KYB) reviews, sample transaction reviews and testing and monitoring programs. Its anti-money laundering team reviews OFAC holds on international automated clearing house (ACH) payments. See how Cross River approaches compliance.