Risk & Compliance
AML (Anti-Money Laundering)
Definition
AML (Anti-Money Laundering) regulations and procedures designed to prevent money laundering through the payment system. Acquirers and PSPs must implement AML programs including transaction monitoring, suspicious activity reporting, and sanctions compliance. High-risk verticals (crypto, forex, gambling) face enhanced AML scrutiny. Compliance is non-negotiable; violations result in severe penalties.
Related Terms
KYC (Know Your Customer)
The process of verifying merchant identity and business legitimacy during onboarding. Required by anti-money laundering regulations. Includes identity verification, business registration checks, beneficial ownership disclosure, and sanctions screening. KYC intensity varies by merchant risk profile and jurisdiction. PayFacs and PSPs perform KYC on behalf of their acquirers.
Underwriting
The risk assessment process acquirers use to evaluate merchant applications. Examines business model, financials, processing history, chargeback rates, industry risk, and compliance status. Determines whether to approve the merchant and on what terms (rates, reserves, limits). High-risk merchants face enhanced due diligence. Strong applications include clean history, audited financials, and compliance documentation.
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