What is AML?

AML stands for Anti Money Laundering. In crypto, this term is widely used because many critics claim that digital assets are used for money laundering. Although the fight against money laundering takes place in all economic sectors, this article will focus on AML measures specific to the blockchain world.

Why is it important to fight money laundering in crypto?

Cryptocurrencies get a bad rap for enabling criminals to run wild. 

Among these, money laundering is mentioned particularly often. Even if in practice it’s just recurring criticism from those who dislike cryptocurrencies (because money laundering in the blockchain industry isn’t as prevalent compared to others), it is still important to battle this phenomenon.

For crypto assets to become democratised and be adopted by both private and institutional investors, certain measures must be put in place to limit as much illegal activity as possible.

A sector can only be attractive to many people when it has a decent reputation. If crypto is considered a means of committing crimes, it will scare off many investors, which certainly isn’t great for the development of this new type of asset.

Is it easy to launder money with current AML legislation?

It’s hard to say what the impact of money laundering on crypto is today. 

Even though many exchanges use the KYC (Know Your Customer) procedure to verify their customers’ identities, there are still many websites where it’s possible to obtain Bitcoin anonymously.

Also, some cryptocurrencies like Monero (XMR) are virtually anonymous, meaning that it’s impossible to track the transactions, as opposed to digital currencies with public ledgers such as Bitcoin or Ethereum.

Overall, money-laundering possibilities for ill-doers are always there, but their number decreases over time due to the law requiring more and more exchange sites to verify the identity of their customers or ban anonymous crypto-asset trade offers on the platforms.

Conclusion on Anti Money Laundering (AML)

AML is very important because it can stop money obtained through criminal activity from infiltrating the crypto industry. Of course, pretending that it’s possible to completely eradicate money laundering is utopian, but fighting it is quite possible and is already done all over. 

Although some people complain that governments stick their noses into the crypto industry by imposing regulations, it should be seen as something crucial for the development of digital assets. In a way, we can consider it the lesser evil.