AML by design: Designing a central bank digital currency to stifle money laundering

Robert Z. Mahari*, Thomas Hardjono, and Alex Pentland 

Edited by Julie K. Stahlhut and Kevin McDermott

Article | Aug. 29 2022


DOI: 10.38105/spr.j0hildxtyi


  • Central bank digital currencies (CBDCs) provide an unprecedented opportunity to design digital money that is inherently resistant to money laundering and the financing of terrorism.
  • Strong forms of digital identity enable the customer due diligence process to be largely automated and make it challenging for bad actors to use a CBDC.
  • Ongoing algorithmic transaction monitoring and interoperable record keeping approaches can enable collaboration between financial institutions to better identify criminal behavior while balancing privacy and financial inclusion.

Article Summary

This article explores how technical central bank digital currency (CBDC) design choices can be used to make a CBDC inherently resistant to money laundering. These design choices not only further anti-money laundering (AML), but they can also help to better balance AML priorities with other goals including financial inclusion, privacy and compliance costs. Moreover, CBDCs provide an opportunity to measure the effectiveness of different design choices in real time. These measurements can facilitate the iterative redesign of CBDCs to identify optimal approaches to meeting regulatory objectives.

Open Access


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Robert Z. Mahari

Media Lab, Massachusetts Institute of Technology, Cambridge, MA

Harvard Law School, Cambridge, MA

Thomas Hardjono

Media Lab, Massachusetts Institute of Technology, Cambridge, MA

Alex Pentland

Media Lab, Massachusetts Institute of Technology, Cambridge, MA