Definition ∞ AML/KYC standards are regulatory requirements financial institutions must follow to prevent illicit financial activities. Anti-Money Laundering (AML) aims to stop criminals from disguising illegally obtained funds as legitimate income. Know Your Customer (KYC) involves verifying the identity of clients to assess potential risks. These measures collectively work to deter fraud, terrorist financing, and other financial crimes within traditional and digital asset markets.
Context ∞ In the digital asset space, the application and enforcement of AML/KYC standards remain a central point of regulatory debate and operational adjustment. Exchanges and other crypto service providers face increasing pressure to implement robust identity verification and transaction monitoring systems to comply with global financial regulations. A critical future development involves the harmonization of these standards across different jurisdictions to provide clearer guidelines for businesses operating internationally.
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