AML (anti-money laundering)

AML (anti-money laundering) explained

Money laundering is the process of making money from crime look as if it came from an honest source. It usually moves through three stages: placing the cash into the financial system, layering it through transfers and purchases to hide its origin, and integrating it back into the economy as apparently clean assets.

Anti-money laundering (AML) is everything an institution does to prevent, detect and report that process. In practice it means knowing who your customers are, watching how they transact, screening them against sanctions and watchlists, and reporting suspicious activity to the authorities.

For example, a customer who opens several accounts and deposits cash just below the amount that triggers extra checks, then wires it all to one overseas account, is showing a pattern an AML programme is designed to notice.

Why it matters in life insurance

In Zambia, AML obligations flow from the Prohibition and Prevention of Money Laundering Act No. 14 of 2001 (as amended) and the Financial Intelligence Centre Act No. 46 of 2010 (as amended), with the FIC as the national financial intelligence unit and sector regulators such as the Bank of Zambia and the Pensions and Insurance Authority supervising their licensees. The exact duties depend on the institution's licence and the regulator's directives. ERMAML, the Ontech Risk & Compliance Suite, groups screening, KYC, transaction monitoring, case management and goAML reporting into one AML module so the programme can be evidenced end to end.

Related terms

CFT (combating the financing of terrorism) · KYC (know your customer) · STR (suspicious transaction report) · FIC (Financial Intelligence Centre)