AML/CTF Framework

Definition ∞ An AML/CTF framework is a system of regulations and procedures designed to combat illicit financial activities. This framework includes policies, controls, and reporting obligations that financial institutions, including those dealing with digital assets, must implement to detect and prevent money laundering and terrorist financing. Its purpose is to uphold financial system integrity and deter the use of legitimate financial channels for criminal purposes.
Context ∞ The application of AML/CTF frameworks to digital assets and decentralized finance presents ongoing regulatory challenges globally. Jurisdictions are actively refining guidelines to extend oversight to virtual asset service providers, addressing issues of pseudonymity and cross-border transactions. Future developments anticipate greater standardization and technological solutions for compliance within the digital asset space.