Definition ∞ Anti-Money Laundering and Combating the Financing of Terrorism measures are regulatory frameworks designed to prevent illicit financial activities. These global regulations compel financial institutions, including those handling digital assets, to monitor transactions, report suspicious activities, and verify customer identities. Their purpose is to deter the use of financial systems for criminal purposes, ensuring integrity across economic operations. Compliance with these measures is a significant operational aspect for entities within the digital asset sector.
Context ∞ The application of AML/CFT measures to digital assets continues to be a central point of discussion among regulators worldwide. Jurisdictions are adapting existing rules and proposing new ones to address the unique characteristics of cryptocurrency transactions. The evolving regulatory landscape presents both challenges and opportunities for digital asset service providers seeking legal clarity and operational security. International cooperation remains vital for establishing consistent standards across borders.
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