AML Screening

AML Screening is the process of monitoring and identifying potentially suspicious financial activities to prevent money laundering and terrorist financing. In the context of on-chain finance, this involves checking wallet addresses against blacklists of sanctioned entities or known illicit actors.

Protocols integrate this screening into their smart contracts, often using oracle services or identity providers to filter participants. By ensuring that only screened entities can interact with a liquidity pool or derivative platform, the protocol remains compliant with global financial regulations.

This proactive approach is essential for institutional adoption of decentralized financial instruments.