Anti-Money Laundering or AML refers to the steps that financial institutions and other institutions use to prevent criminals from depositing or transferring funds from illicit activity. The primary goal of AML is to prevent transactions from criminal organizations and/or individuals to aid in various crimes.
Know Your Customer or KYC refers to the checks that a company performs to ensure their customers are in fact who they say they are and are not harmful to the business.
KYC
In the initial phases of KYC, any new customer is required to provide additional information during the onboarding process. This information is used to ensure identity verification and that you are who you say you are. This may include personal, demographic, legal, and biometric information. In addition, a risk assessment is performed to determine the likeliness of an individual or organization to become involved in laundering money.
For high-risk customers, an additional phase may be implemented to determine how to work with these customers. This usually involves implementing stricter requirements to participate.
AML Compliance
AML Compliance laws have been written to keep up with criminals on how to "clean" dirty money gained from illegal activity. The USA Patriot Act (as an example) has made various changes to laws to keep up with the new ways criminals look to beat the system. In addition to new laws, compliance teams conduct a regular review of their compliance and risk programs.