What is AML (Anti-Money Laundering) compliance and why is it important?

AML (Anti-Money Laundering) compliance refers to rules and procedures that cryptocurrency exchanges and financial institutions use to prevent illegal money transfers. These regulations require companies to verify user identities, monitor transactions for suspicious activity, and report large or unusual transfers to authorities. For example, exchanges may require government ID verification before allowing withdrawals. AML is important because it helps prevent criminals from using cryptocurrencies to hide proceeds from illegal activities like drug trafficking or fraud. It also protects legitimate users by ensuring exchanges operate legally and reduces the risk of accounts being frozen due to compliance violations. Most major crypto exchanges now implement AML procedures to maintain regulatory approval and operate in different countries.