Exchanges must follow Anti-Money Laundering (AML) guidelines to prevent their platforms from being used for illegal financial activities such as money laundering, terrorism financing, and fraud. AML rules are designed to ensure transparency in financial transactions and make it harder for criminals to hide the origins of illicit funds. Since cryptocurrency and stock exchanges handle large volumes of money, they are attractive targets for those seeking to move or disguise illegal earnings.

By enforcing AML procedures, exchanges are required to verify customer identities through Know Your Customer (KYC) checks, monitor suspicious activity, and report unusual transactions to relevant authorities. This reduces the risk of their platforms being exploited and builds trust among regulators, governments, and investors. Without these measures, exchanges could face heavy fines, loss of licenses, or even criminal liability.

For investors, AML compliance adds an important layer of protection. It assures them that the exchange operates under recognised legal standards and reduces the likelihood of sudden closures caused by regulatory crackdowns. In addition, strong AML controls support the overall stability and credibility of financial markets, both traditional and digital.

In short, AML guidelines are not just legal obligations but essential safeguards that help exchanges maintain integrity, protect investors, and ensure that markets remain safe and fair for legitimate participants.