AML CFT Framework

Definition ∞ An AML CFT Framework is a system designed to prevent illegal financial activities. This framework comprises policies, procedures, and regulations aimed at deterring money laundering and combating the financing of terrorism within financial systems. It establishes legal obligations for institutions to monitor transactions and report suspicious activities, ensuring financial integrity.
Context ∞ The application of AML CFT frameworks to digital assets remains a central regulatory discussion, with authorities seeking to adapt existing rules to the unique characteristics of blockchain transactions. Ongoing efforts concentrate on achieving global consistency in these standards to mitigate risks associated with cross-border digital asset movements. The effectiveness of these frameworks directly influences the legitimacy and adoption of cryptocurrency within mainstream finance.