AML FAQ: money laundering, KYC and SARs

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Compliance with AML (Anti-Money Laundering) rules is mandatory in the United States for banks, currency exchanges, casinos, real estate brokers and money services businesses. Here are the ten questions we hear most often from people starting to build a compliance program.

Question	Answer
1. What is money laundering?	Money laundering is the process of making illegally obtained funds look legitimate through a series of transactions that disguise where the money really came from.
2. What does AML mean?	AML stands for Anti-Money Laundering. It refers to the policies, procedures and laws designed to prevent and detect money laundering and other illicit financial activity.
3. Who must comply with AML regulations?	Financial institutions, currency exchanges, real estate brokers, casinos and money services businesses are some examples of entities that must comply with AML regulations.
4. What is KYC and how does it relate to AML?	KYC stands for “Know Your Customer.” It is the process financial institutions use to verify their customers’ identity and assess their suitability and the potential risks of the business relationship. KYC is an essential part of any AML program.
5. What is an AML compliance officer?	An AML compliance officer is an employee who is responsible for making sure the organization complies with all AML laws and regulations.
6. What are “AML alerts”?	AML alerts are notifications generated by automated transaction monitoring systems at financial institutions. They flag suspicious activity that could point to money laundering.
7. What is a “suspicious transaction”?	A suspicious transaction is any transaction that seems to have no clear business purpose, or that is unusual given the customer’s history or normal business activity.
8. What is the OFAC sanctions list?	OFAC (the Office of Foreign Assets Control) maintains a list of individuals and organizations that US citizens and entities are prohibited from doing business with under various sanctions programs.
9. What is a SAR?	SAR stands for “Suspicious Activity Report.” Financial institutions must file a SAR with the regulatory authorities if they suspect a transaction involves money laundering or any other criminal activity.
10. What are some consequences of not complying with AML laws?	Consequences range from substantial fines to prison time for those responsible. On top of that, the organization’s reputation can suffer irreparable damage.

About the author

Zulma Eliana Bourelly

Zulma Eliana Bourelly is the founder of Riveros Corp (Riveros International Business Corp, Miami, Florida). Since 2009 she has helped entrepreneurs, companies, and religious and nonprofit organizations, both in the United States and from their home countries without traveling to the US, form and maintain their US companies and meet AML/KYC requirements. She has been a Florida Notary Public since 2010, with state registration as a Remote Online Notary (RON); a County Court Mediator certified by the Florida Supreme Court; a Certified Anti-Money Laundering Specialist (CAMS) by ACAMS; and a Certified Notary Signing Agent with the National Notary Association (NNA). She holds a law degree from the Universidad Nacional de Colombia and is not licensed to practice law in Florida or anywhere in the United States. She writes in Spanish and English about company formation, compliance and public records on US Jurisdiction, the group's blog. Service in Spanish, English and Italian. Legal notice: I AM NOT AN ATTORNEY LICENSED TO PRACTICE LAW IN THE STATE OF FLORIDA, AND I MAY NOT GIVE LEGAL ADVICE OR ACCEPT FEES FOR LEGAL ADVICE.