AML. Three letters you encounter almost everywhere today — in the news, in banking forms, in business obligations. But what does the abbreviation AML actually mean? And why should you care? In this article, we explain it simply and without unnecessary complexity.
Table of contents
What does AML mean?
AML stands for Anti-Money Laundering — measures against money laundering. In Czech legislation, the term used is 'measures against the legalisation of proceeds of crime and financing of terrorism'.
Money laundering is a process where illegally obtained funds — for example from fraud, corruption, tax evasion, or drug trafficking — are transferred in a way that makes them appear to be legitimate income. AML measures prevent this process.
The term AML encompasses the entire system of laws, regulations, procedures, and technologies designed to identify, prevent, and report suspicious financial activities.
Why is AML important?
Money laundering is not a marginal problem. It is estimated that 2–5% of global GDP is laundered annually — that's USD 800 billion to 2 trillion. AML measures are important because they:
- Protect the financial system from exploitation by criminals and terrorists
- Help state authorities detect suspicious transactions and criminal activity
- Prevent the financing of terrorism and organised crime
- Increase trust in the business environment and financial markets
Without AML measures, the financial system would be much more vulnerable — and businesses could unknowingly facilitate illegal activities.
What are the main components of AML?
AML is not just one law. It's an entire ecosystem of interconnected measures:
- KYC (Know Your Customer) — identification and verification of client identity before starting a business relationship
- CDD (Customer Due Diligence) — client screening, risk assessment, source of funds, and purpose of transaction
- Screening — checking clients against sanctions lists, PEP registers, and adverse media
- Suspicious transaction reporting (OPO) — reporting suspicious transactions to the Financial Analytical Office
- Internal policies (SVZ) — the company's internal AML manual defining procedures and responsibilities
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AML in the Czech Republic
In the Czech Republic, AML is governed by Act No. 253/2008 Coll. This law sets obligations for so-called obliged entities — subjects that must implement AML measures. These include, among others:
- Banks, insurance companies, and financial institutions
- Real estate agents and intermediaries
- Accountants and tax advisers
- Lawyers and notaries (for certain transactions)
- Dealers in precious metals, art, and luxury goods
- Crypto-asset service providers
- Any entrepreneur accepting cash payments over EUR 10,000
Other AML abbreviations you should know
A number of other abbreviations are used in the AML world. Here are the most important:
- CFT (Combating the Financing of Terrorism) — often cited together with AML as AML/CFT
- FATF (Financial Action Task Force) — the intergovernmental organisation that sets global AML standards
- FAU (Financial Analytical Office) — the Czech supervisory body for AML, receiving and investigating suspicious transaction reports
- AMLA (Anti-Money Laundering Authority) — the new European supervisory authority headquartered in Frankfurt (from 2025)
- AMLR (Anti-Money Laundering Regulation) — the new directly applicable EU regulation effective from 2027
Understanding these abbreviations will help you better navigate AML regulation and understand what is expected of you as a business owner.
What will change in the future?
AML regulation is constantly evolving. From 2027, the new AMLR regulation will apply across the entire EU, lowering the mandatory identification threshold for cash payments to EUR 3,000, expanding the circle of obliged entities, and introducing uniform rules for all member states.
The new European supervisory authority AMLA will directly oversee the largest financial institutions and coordinate national authorities. For Czech businesses, this means stricter oversight and higher demands on AML compliance.
Conclusion
The abbreviation AML stands for Anti-Money Laundering — measures against money laundering. It's not an abstract concept from the financial world, but a concrete set of rules that apply to a wide range of entrepreneurs in the Czech Republic. The sooner you understand what AML means and what obligations flow from it, the better prepared you'll be.
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