AML/CTF procedure: what is it?

Since crypto and cryptocurrency transfers are anonymous, cryptocurrency exchanges, services and companies can become a platform for illegal funds laundering. That is why services that work not only with fiat, but also with crypto, implement AML/CTF procedures.

What is AML/CTF?

AML/CTF (Anti-money laundering / Counter-terrorism financing) - a set of measures and procedures aimed at identifying and/or preventing the use of the service for money laundering and terrorism financing.

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The AML procedure is linked to KYC (Know Your Customer) requirements, which include verifying the identity of customers and their source of income. KYC also requires financial institutions (exchanges, companies, etc.) to constantly monitor the activities of their users. The requirements for AML/CTF procedures are provided for by the current legislation and the best world practices.

What is the AML/CTF procedure?

By implementing AML/CTF procedures, the company takes a set of measures to ensure that the service cannot be used to turn illegally obtained funds into legal ones. Some of the most common measures are procedures for monitoring operations, monitoring customer information and other necessary procedures. For this, automated tools, software solutions and algorithms can be used. They check transactions for any connection to dubious services or platforms.

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Compliance with AML/CTF procedures is mandatory. A user who ignores the fulfillment of the requirements of the service (especially regarding the execution of AML/CTF and KYC procedures) will be denied further service and operations, and his balances may be blocked.

Money laundering is a financial crime. Failure to comply with the required procedures can cause reputational and material losses due to fines imposed by regulatory authorities.