A Brief Explanation of Components and Drivers Within the Vasp Compliance Ecosystem

AML/ CFT, KYC, KYT, what do they mean, and why are they important? A brief explanation of terms, components, and drivers within the Compliance ecosystem.‍‍

Overview of AML/CFT

Regulation of financial markets and institutions is essential to cultivate trust and stability across the global ecosystem. AML (Anti Money Laundering) and CFT (Counter Financing of Terrorism) are the umbrella regulatory obligations that broadly encompass a range of policies, procedures, and controls used to detect financial crimes and their perpetrators, including KYC (Know Your Customer) and KYT (Know Your Transaction). By analyzing people, entities, wallets, and transactions using AML/CFT standards, a business can identify and report suspicious and illegal activity to authorities in compliance with the law. It’s estimated by the United Nations Office on Drugs and Crime (UNODC) that in one year, "2–5% of global GDP, or $800 billion – $2 trillion in current US dollars''(1) is laundered globally. Entities caught facilitating transactions linked to money laundering or other illegal activities or found to be non compliant can face heavy fines, cease and desist orders, or in extreme cases even face jail time.‍