What constitutes a 'financial institution' under AML laws?

A 'financial institution' under Anti-Money Laundering (AML) laws encompasses a broad range of entities that are involved in financial transactions. This includes not only banks and credit unions but also brokers, investment firms, insurance companies, and other organizations that engage in activities such as accepting deposits, making loans, or facilitating the transfer of funds. The definition is intentionally broad to ensure that all potential avenues for money laundering are covered, as these institutions play critical roles in the financial system and are often the first line of defense against illicit financial activities.

By recognizing a wide array of entities as financial institutions, AML laws aim to monitor and regulate how money flows within the economy. This helps prevent money laundering and terrorist financing activities that could undermine the integrity of the financial system. Hence, the inclusion of various financial service providers emphasizes the importance of vigilance and compliance across the spectrum of organizations that facilitate financial transactions.