AML Compliance Framework

Definition ∞ An AML Compliance Framework is a system financial institutions implement to detect and prevent money laundering. This framework includes policies, procedures, and internal controls designed to identify suspicious transactions and report them to regulatory authorities. Its primary aim is to safeguard the financial system from illegal activities, particularly those involving digital assets and their underlying transfer mechanisms. Effective frameworks ensure adherence to anti-money laundering regulations globally.
Context ∞ The current discussion around AML Compliance Frameworks in crypto centers on adapting traditional regulations to the decentralized and pseudonymous nature of digital assets. Ongoing efforts focus on developing technological solutions for transaction monitoring and enhancing information sharing among regulated entities. Future developments will likely involve greater interoperability between traditional finance and digital asset compliance systems.