AML
Quick Definition: Anti-Money Laundering (AML) is a framework of laws, regulations, and operational procedures designed to prevent criminals from disguising illegally obtained funds (e.g., from fraud, drug trafficking, or corruption) as legitimate income.
- Category: Crypto Regulation / Compliance
- Difficulty Level: Intermediate
🔍 How it Works
The Three Stages: Money laundering typically occurs in three distinct phases:
- Placement: Introducing “dirty” cash into the legitimate financial system (e.g., depositing cash into a bank account or purchasing cryptocurrency).
- Layering: Shuffling funds through complex webs of transactions (such as swapping different tokens or transferring assets across multiple wallets) to obscure the original audit trail.
- Integration: Reintroducing the laundered funds into the mainstream economy as seemingly legitimate wealth (e.g., buying real estate or business investments).
Customer Due Diligence (CDD/KYC): Regulated financial services must verify the identity of their users (“Know Your Customer”) and assess their risk profile to ensure they are not using the service for illicit activities.
Transaction Monitoring: Financial platforms deploy automated systems to scan for red flags, such as transaction structuring (breaking large payments down into smaller, sub-threshold transfers) or rapid, unexplained movement of assets.
🇵🇭 The Philippine Context
In the Philippines, AML efforts are governed by the Anti-Money Laundering Act of 2001 (Republic Act No. 9160), as amended, and overseen by the Anti-Money Laundering Council (AMLC), which acts as the country’s central Financial Intelligence Unit (FIU).
Under local regulations, all BSP-licensed VASPs and SEC-licensed CASPs are classified as “Covered Persons”. This designation subjects them to strict regulatory duties, including keeping comprehensive records for at least 5 years and registering directly with the AMLC.
The country achieved a massive regulatory milestone in February 2026 when it formally exited the Financial Action Task Force (FATF) “grey list”, a major achievement driven by the country’s tightened oversight on cross-border crypto remittances, stricter casino regulations, and the localized VASP Travel Rule.
⚖️ Covered Transactions (CTR) vs. Suspicious Transactions (STR)
| Feature | Covered Transaction Report (CTR) | Suspicious Transaction Report (STR) |
|---|---|---|
| Primary Trigger | Based strictly on an objective monetary limit. | Based on subjective red flags or profile mismatches. |
| Reporting Threshold | Single or aggregate cash transactions exceeding ₱500,000 within one banking day. | No minimum threshold (filed even for failed or low-value attempts). |
| Reason for Filing | Routine regulatory filing; does not necessarily imply wrongdoing. | Indication of potential financial crime or lack of economic logic. |
| Tipping-Off Rule | Strictly confidential, but standard practice. | A criminal offense to “tip off” or notify the client that an STR is being prepared. |
| Timeline to File | Within 5 working days from the transaction date. | Within 5 working days from the date the suspicion was determined. |