A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

A

ABC - Anti-Bribery and Corruption

Both AML & KYC are closely related to anti-bribery and corruption management. Driven primarily by the U.S. FCPA (Foreign Corrupt Practices Act), but also by the U.K. Bribery Act, this form of combating financial crime focuses on reliable and compliant management of business partners throughout their lifecycle, from onboarding through continous monitoring of changes in circumstances and transactions (both monetary and non-monetary) and periodic audits to the termination of the partnership.

ACAMS - Association of Certified Anti-Money Laundering Specialists

The largest global membership organization supporting individuals and organizations who are dedicated to fighting financial crime. ACAMS provides a platform to share the national and international best practices and support organizations to built robust Anti-Financial Crime readiness.

ACH - Automated Clearing House

ACH is an automated electronic funds-transfer system that processes both debit and credit transactions in a batch environment.

ADI - Authorised Depository Institution

In Australia, financial institutions are only allowed to accept deposits from the public by being licensed by the Australian Prudential Regulatory Authority (APRA).

ADR - Account Detection Rate

Rate of detected fraud cases or accounts. A fraud case can have more than one fraudulent transaction.

AI - Artificial Intelligence

The generic term for mapping human thought and action using computers and IT support. The goal is to teach computers intelligent behavior and machine learning so that they can evolve without human assistance.

AKA - Also known as / Alias

"Alias/AKA", as defined by OFAC, is a term for a relatively broad or generic alias that can generate a large amount of false hits when such names are run through a computerized screening system. OFAC records these AKAs because, according to the information available to it, sanctions targets refer to themselves by these names or are referred to by them.

AML - Anti-Money Laundering

Identify, protect and report money laundering and suspected terrorist financing (CFT) in all financial transactions for all industries. Following guidelines and best practices from international regulators and industry organizations, as well as identifying new profiles, hidden networks and internal fraud, is a complex undertaking for all regulated entities. Staying up to date and understanding the technological pitfalls and opportunities is also a challenge for regulators and supervisors.

AML Investigation

After a system match in an usual monitoring process, investigations are initiated with regard to the report. For this purpose, information about the account holder, its connections, activities, etc. is obtained, evaluated and stored.

AML Monitoring

A part of the process that companies or institutions use through anti-money laundering and financial crime software to monitor various activities/actions of their customers and report them to the national FIU in case of suspicious activities.

AMLA - Anti-Money Laundering Act

Act on tracing profits from serious crimes. The Act names "obligated persons" who are subject to special legal requirements as a result of their activities, in order to protect the (financial) market and its participants. Among others, the following are listed: financial and credit institutions, insurance companies, auditors, etc.

AMLC - Anti-Money Laundering Council

The Philippines' Financial Intelligence Unit

AMLD - Anti-Money Laundering Directive

The AMLDs are terms within the EU to prevent anti-money laundering and terrorist financing. The first Anti-Money Laundering Directive (1AMLD) was published in 1991. Meanwhile there are six AMLDs, the latest of which was released in 2018.

AMLID - Anti-Money Laundering International Database

The International Money Laundering Information Netword (IMOLIN) describes AMLID as follows: The Anti-Money Laundering International Database (AMLID) , a compendium of analyses of anti-money laundering laws and regulations, including two general classes of money laundering control measures (domestic laws and international cooperation) as well as information about national contacts and authorities. AMLID is a secure, multi-lingual database and is an important reference tool for law enforcement officers involved in cross-jurisdictional work.

Anti-Money Laundering Program

A program designed to assist institutions in their fight against money laundering and terrorist financing. Many countries have regulatory requirements that require financial institutions (which includes banks, securities dealers, and money services providers) to establish such programs.

AML Back-Testing

The back-testing is used to review and detect past, suspicious cases. In retrospect, the processes and internal security system can also be reviewed.

APG - Asia-Pacific Group on Money Laundering (also: APGML)

A Financial Action Task Force (FATF)-style regional body consisting of jurisdictions in the Asia/Pacific Region.

APGML - Asia-Pacific Group on Money Laundering (also APG)

A Financial Action Task Force (FATF)-style regional body consisting of jurisdictions in the Asia/Pacific Region.

API - Authorised Payment Institution

In the UK, financial institutions have to comply with certain regulations and have to be listed on the Financial Services Register to get authorized by the Financial Conduct Authority (FCA) and carry on banking business.

APTs - Asset Protection Trusts

An APT is a trust instrument designed primarily to protect an individual's assets from creditors, lawsuits, or legal judgments through an offshore (out-of-country) account. ATPs contain complex regulatory requirements.

ARS - Alternative Remittance System

ARS is a system, often associated with ethnic groups from Asia, Africa or Middle East in which non-physical values are transported beyond national borders, bypassing banking systems and without recordings or receipts.

Asset Confiscation

In the course of an investigation or a specific criminal offense, assets can be confiscated from individuals or legal entities by regulatory bodies.

Asset Freezing

Asset freezing is applied to suspects, or already sanctioned individuals / legal entities, in order to prevent access to funds and resources and thus prevent further criminal actions.

AST - Automated Screening Tool

ASTs are software systems that support large financial institutions in their screening process. Individuals, groups oder organizations who breach legal requirements can be listed on sanction lists. The AST program compares the available data set with existing sanctions lists and issues a message in case of a hit.

ATM - Automated Teller Machine

An electronic banking service that allows customers to perform simple transactions such as checking account balances, withdrawing or depositing cash, transferring funds, or printing account statements without the need for a bank employee.

ATO - Account Takeover

An Account Takeover is a form of identity theft and fraud in which a third party gains illegal access to an account. Various data such as PIN or mail addresses etc. can be changed or be used for other actions.

B

Backtesting

Backtesting is used to review and detect past, conspicuous cases. In retrospect, the processes and internal security system can thus also be reviewed.

BaFin - Bundesanstalt für Finanzdienstleistungsaufsicht (German Federal Financial Supervisory Authority)

The BaFin contributes, among other things, with its solvency supervision to counteracting risks to the assets entrusted to the institutions (banks, financial, payment and e-money institutions, as well as branches of foreign credit institutions from the European Economic Area, insurers, pension funds, capital management companies and domestic funds). In addition, BaFin's market supervision is intended to ensure fair and transparent conditions on the markets and also to protect the consumer community. This protection extends to all products and financial services that BaFin supervises.

Batch Processing

A batch is a (data) bundle. In comparison to a real-time transaction, this batch is first stored on a server / cloud and processed at a defined point of time. This downstream data processing offers the advantage that large amounts of data can be executed at once and at a time of low server utilization (at night).

Batch Screening

Batch screening is the process of screening a company's entire customer base and other related entities (customers or suppliers) to regular reviews using ASTs.

BCBS - Basel Committee on Banking Supervision

The Basel Committee on Banking Supervision (BCBS) is the primary global standard setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters. Its 45 members comprise central banks and bank supervisors from 28 jurisdictions.

BIS - Bureau of Industry and Security

The Commerce and Security Division is subordinate to the U.S. Department of Commerce and is concerned with maintaining and strengthening effective and efficient export controls and contract compliance systems, as well as providing leadership and participation in international export control bodies. BIS operates under the following mission statement: The Bureau of Industry and Security (BIS) advances U.S. national security, foreign policy, and economic objectives by ensuring an effective export control and treaty compliance system, and by promoting continued U.S. leadership in strategic technologies.

Block List

A block list does not list suspicious people, but untrustworthy addresses and programs. It is used by Internet service providers and free mailbox providers and must be updated regularly.

BMPE - Black Market Peso Exchange

The black market for peso exchange is one of the most successful and efficient money laundering schemes in the world. In this case, there is no attempt to inconspicuously smuggle money into banks or transport it across national borders. Originating in Colombia and Mexico, this system has become established for drug dealers and others especially toward the U.S. border to exchange drug dollars for local Latin American currencies. The money traffickers are based in the Latin American countries and have so-called agents in the respective countries who take care of the money business locally. If the drug dollars produced in the U.S. are given to a money dealer (agent) in the U.S. who is part of the Colombian drug cartel, the pesos are made available at the money dealer for the drug cartel in Colombia. The drug cartel is out of business because the dollars generated are now locally in Colombia in pesos without having crossed the border. The money dealer on the U.S. side now deposits the U.S. dollars into banks after structured transactions and then sells U.S. dollars to Colombian importers.

BO - Beneficial Owner

Beneficial Owner is a natural person who can own and control a beneficial title over a legal entity in the form of a company, trust or foundation. The BO is also referred to as the Ultimate Beneficial Owner (UBO), which is also the last instance of ownership and entitlement in the form of a natural person.

BSA - Bank Secrecy Act

The BSA was enacted in 1970 and is the most important regulation in the U.S. against money laundering and financial crime. Financial institutions must comply with the reporting and recordkeeping requirements for various transactions.

C

CAMS - Certified Anti-Money Laundering Specialist

A Certified Anti-Money Laundering Specialist has a comprehensive understanding and knowledge of AML/CFT at national and international levels and has been certified by the central body ACAMS.

CBDC - Central Banks Digital Currency

Digital central bank money serves as an alternative / complement to ordinary fiat money (physical bills & coins) issued by central banks. Users of digital central bank money can deposit these funds directly at the central bank. Compared to Bitcoins, this provides the advantage that the digital money flows are regulated and managed by the central bank.

CDD - Customer Due Diligence

International standards for the prevention of money laundering and financial crime. The ongoing process of screening new and existing customers to minimize the risk of money laundering or terrorist financing. CDD helps banks and other institutions create predictive customer profiles, and match them against actual customer actions and sanctions lists to detect unusual or suspicious discrepancies, and minimize sanctions risks.

CFT - Countering the Financing of Terrorism (also: CTF)

Combating terrorist financing by investigating and monitoring accounts, transactions and individuals to identify sources of funds, and freeze funds and/or other assets if suspected. (cf. Asset Freezing)

Compliance

In the legal field, compliance means adherence to all legal requirements and internal regulations by the company and its employees.

Counterparty

The other side of a business activity - it can be an individual person or a legal entity.

CNP - Card not present

A card-not-present transaction describes the situation where the cardholder is not present at the point-of-sale (POS) at the time of the payment transaction, the card is not physically present at the seller's premises, and the buyer makes a distance payment. This is frequently the case during online or catalog purchases.

CTF - Countering Terrorist Financing

Combating terrorist financing by investigating and monitoring accounts, transactions, and individuals to identify sources of funds and freeze funds and/or other assets if suspected. (cf. Asset Freezing)

CTR - Currency Transaction Report

This report is used to report all transactions that exceed a deposit / withdrawal threshold set by the government. The amount of these limits, as well as the obligation who is required to report, may vary in each country.

CRS - Common Reporting Standard

According to OECD: The Common Reporting Standard (CRS), developed in response to the G20 request and approved by the OECD Council on 15 July 2014, calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

Crypto Asset

The European Banking Authority (EBA) defines crypto assets as follows: Crypto assets are a type of private financial asset that relies primarily on cryptography and distributed ledger technology as part of its perceived or inherent value. There is a wide range of crypto-assets, including payment/exchange tokens (e.g., so-called virtual currencies (VCs)), investment tokens, and tokens for access to a good or service (so-called "utility" tokens).

Cryptocurrency

A digital means of payment based on blockchain technology and secured with a mostly decentralized and cryptographic payment system. These cryptocurrencies are not yet subject to banking or government regulation. The best-known example of this is Bitcoin.

D

DNFBPs - Designated Non-Financial Businesses and Professions

According to the FATF's recommendation, certain non-financial professions and businesses should also be subject to certain regulations imposed by financial institutions, as these business practices offer a high potential for money laundering. The following professions are affected, among others: Accountants, external auditors, and tax advisors, casinos and other gambling operators, business service providers, precious metals dealers, dealers in precious stones, lawyers, notaries and other independent lawyers, real estate agents, trusts.

DOJ - US Department of Justice

US Department of Justice

DPL - Denied Persons List

The Denied Persons List is published by the American Bureau of Industrie & Security (US BIS) and lists individuals, companies and organizations that have violated a trade act in the United States. As a result, those listed lose their export privileges in the US. Non-listed persons, companies and organizations are prohibited from conducting export transactions with the listed persons.

Digital Asset

A digital asset can be anything that is in digital form and can demonstrate rights of use. Examples include: software, logos, illustrations, etc.

E

EAG - Eurasian Group on Combating Money Laundering and Financing of Terrorism

The Eurasian group on combating money laundering and financing of terrorism (EAG) is a FATF-style regional body which comprises 9 countries: Belarus, China, Kazakhstan, Kyrgyzstan, India, Russia, Tajikistan, Turkmenistan and Uzbekistan. EAG is an associate member of the FATF.

EAR - Export Administration Regulations

The export regulations administered by BIS are used to control exports and re-exports of U.S. goods.

EDD - Enhanced Due Diligence

EDD is a part of CDD, which requires that high-risk customers are subject to close inspection and risk assessment, with measures to minimize these risks. The activities and transactions must be monitored in such a way that a deviating action or activity of the customer directly results in a report.

EFT - Electronic Funds Transfer

Digital movement of money from one bank account to another. This can happen within one financial institution or between different financial institutions. Bank personnel are not directly involved in this type of transaction.

EGFIU - Egmont Group (of Financial Intelligence Units)

The association of 166 FIUs operating worldwide. The EGFIU provides a platform for exchange in the fight against money laundering and terrorist financing.

EIFR - European Institute for Financial Regulation

The European Institute of Financial Regulation was established in 2008 with the aim of improving mutual understanding between regulators.

EKYC - Electronic Know Your Customer

An electronic identity and background check required by regulatory requirements to identify a client. The process is streamlined through paperless, less bureaucratic steps.

ESAAMLG - Eastern and Southern Africa Anti-Money Laundering Group

An FATF-style regional body covering countries from the eastern region of Africa down to the southern tip of Africa.

Europol

Europol is the law enforcement agency of the European Union. Its main objective is to achieve a safer Europe for the benefit of all EU citizens.

EV - Electronic Verification

In electronic verifications, various criteria are compared and matched using specific software. For individuals, these criteria can include name, date of birth, gender, etc.

F

False Negative

In a screening process, a match with for example a sanctions list is incorrectly not detected, even though a match exists.

False Positive

A screening process indicates a match to a sanctions list, but on closer inspection it turns out to be a false alarm.

FATCA - Foreign Account Tax Compliance Act

US citizens and green card holders are required to disclose and report all income tax relevant information about foreign accounts and income etc. so that no (foreign) income can be concealed.

FATF - Financial Action Task Force

The global money laundering and terrorist financing watchdog that sets international guidelines and standards to combat financial crime.

FCA - Financial Conduct Authority

An independent financial market regulator in the United Kingdom, with the aim of making financial markets fair for their users. The FCA is subject to Parliament and the Treasury.

FCPA - Foreign Corrupt Practices Act

The FCPA, one of the fastest growing areas of law and corporate compliance, is now a majer concern due to globalization of business and the US government's vigorous commitment to enforcement. The Act makes it a crime for US-listed companies to obtain business by bribery of a government official of another country.

FEP - Financially Exposed Person

Individuals who should be identified in the KYC process and screened with particular care as they hold leading positions (management, board of directors) in the largest companies in the world.

FinCEN - Financial Crimes Enforcement Network

The mission of the Financial Crimes Enforcement Network is to safeguard the financial system from illicit use, combat money laundering and its related crimes including terrorism, and promote national security through the strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence.

FIU - Financial Intelligence Unit

Financial Intelligence Unit (FIU) is the internationally used term for government agencies responsible for financial transaction investigations in the context of combating money laundering and terrorist financing. In accordance with international regulations, and usually national regulations derived therefrom, national FIUs receive reports of suspicious financial transactions from credit institutions and other financial intermediaries. The FIUs are either law enforcement agencies themselves or cooperate with them and financial market supervisory bodies. In the area of international cooperation, the Financial Action Task Force on Money Laundering and the Egmont Group of Financial Intelligence Units are important.

FSE List - Foreign Sanctions Evaders List

OFAC publishes a list of U.S. foreign persons, companies, or entities that have either directly, indirectly, or attempted to violate U.S. sanctions. All transactions within the U.S. with FSEs are prohibited.

FSRB - Financial Action Task Force-Style Regional Body

9 FATF-style regional bodies with similar forms and functions have been established for specific regions. Asia/Pacific Group on Money Laundering (APG), based in Sydney, Australia; Caribbean Financial Action Task Force (CFATF), based in Port of Spain, Trinidad and Tobago; Eurasian Group (EAF) based in Moscow, Russia; Eastern & Southern Africa Anti-Money Laundering Group (ESAAMLG), based in Dar es Salaam, Tanzania; Central Africa Anti-Money Laundering Group (GABAC), based in Libreville, Gabon; Latin American Anti-Money Laundering Group (GAFILAT), based in Buenos Aires, Argentina; West African Anti-Money Laundering Group (GIABA), based in Dakar, Senegal; Middle East and North Africa Financial Action Task Force (MENAFATF), based in Manama, Bahrain; Council of Europe Anti-Money Laundering Group (MONEYVAL), based in Strasbourg, France (Council of Europe).

FTFs - Foreign Terrorist Fighters

Individuals who travel from their home country to a crisis area to join terrorist organizations, and either actively fight or provide support on the ground.

FX - Foreign Exchange

Trade of one foreign currency for another.

G

GABAC - Task Force on Money Laundering in Central Africa

An FATF-style regional body covering countries in Central Africa.

GFSC - Guernsey Financial Services Commission

The Guernsey Financial Services Commission supervises and regulates licenses in the banking, fiduciary, insurance and investment sectors. In doing so, the GFSC follows the international standards of the FATF, BCBS and other regulating institutions in the insurance and investment sectors.

GIABA - Inter-Governmental Action Group against Money Laundering in West Africa

West African anti-money laundering and counter-terrorist financing institution with the aim and responsibility to support member states in terms of their capacity to prevent money laundering and terrorist financing.

GPML - Global Program against Money Laundering

The United Nations Office on Drugs and Crime (UNODC) have established the Global Program against Money Laundering, Proceeds of Crime and Terrorist Financing to assist member states in building and strengthening anti-money laundering and counter-terrorist financing measures.

GRC - Governance, Risk and Compliance

Principles of action as a condition for successful corporate management. Governance is the ethical and responsible management of a company in relation to all stakeholders. Risk refers to risk management, which reduces or avoids threats to the achievement of corporate objectives through the early identification of risks and the introduction of countermeasures. Compliance describes the observance of regulations and laws, which can occur in both external form (organizations, government regulations, etc.) and internal form (internal recycling / environmental regulations).

Greylist

The FATF lists countries that are high risk in terms of money laundering, terrorist financing and proliferation financing, and decide to work with the FATF on the deficiencies. With the decision to improve current conditions, the respective countries are placed on the Greylist and under special observation by the FATF. The implementation of measures and compliance with the timetable are regularly monitored. The FATF Greylist only refers to the USA. Other jurisdictions, such as the EU, also have their own lists.

GSB - Government or State Owned Body

State-owned companies are controlled by the state. The state has either a full, majority or minority shareholding.

GwG - Geldwäschegesetz (German Anti-Money Laundering Act)

Act on Tracing Profits from Serious Crimes. The Act names "obligated persons" who are subject to special legal requirements as a result of their activities, in order to protect the (financial) market and its participants. Among others, the following are listed: Financial and credit institutions, insurance companies, auditors, etc.

H

HMT - Her Majesty's Treasury (HM Treasury)

HM Treasury is the government’s economic and finance ministry, maintaining control over public spending, setting the direction of the UK’s economic policy and working to achieve strong and sustainable economic growth.

HNI /HNWI - High-Net-Worth Individuals

High-net-worth private customers with at least 1 million USD in liquid assets.

I

IBC - International Business Company

Companies, also known as offshore companies, which are tax neutral due to the incorporation of the company in certain jurisdictions.

ICC - International Chamber of Commerce

The ICC describes itself as follows: We are the institutional representative of more than 45 million businesses in over 100 countries with a mission to make business work for everyone, every day, everywhere. Through a unique blend of advocacy, resolution and standard-setting, we promote international trade, responsible business conduct and a global regulatory approach, and also provide market-leading dispute resolution services.

IdP / IDP - Identity Provider

A service that collects, coordinates and verifies digital identities. Companies use this service to assign different rights to users or devices (when logging in / carrying out transactions).

ID&V - Identification & Verification

Screening and verification of individuals that relates to unique biometric characteristics such as: facial, fingerprint, voice recognition. ID&V is used for, among other things, online payments and travel bookings.

IMF - International Monetary Fund

The IMF describes itself as: An organization of 190 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

IMOLIN - International Money Laundering Information Network

IMOLIN describes itself as follows: The International Money Laundering Information Network (IMoLIN), an Internet-based network assisting governments, organizations and individuals in the fight against money laundering. IMoLIN has been developed with the cooperation of the world's leading anti-money laundering organizations. Included herein is a database on legislation and regulation throughout the world (AMLID), an electronic library, and a calendar of events in the anti-money laundering field.

ITAR - International Traffic in Arms Regulations

The ITAR regulates the transfer, export, and servicing of U.S. defense articles and defense technologies.

IVTS - Informal Value Transfer System

Similar to BMPE, IVTS is also an alternative remittance system. Here, values are also not physically transferred, but distributed without documents via illegal international organizations through straw men.

J

JMLIT - Joint Money Laundering Intelligence Taskforce

The Joint Money Laundering Intelligence Taskforce (JMLIT) is a U.K. body designed to support and enhance public-private cooperation. The JMLIT provides a platform where government agencies and banks (or other private companies) can share information about money laundering.

JMLSG - Joint Money Laundering Steering Group

The Joint Money Laundering Steering Group (JMLSG) is a U.K. private sector body that publishes guidance to assist its member associations in combating money laundering and terrorist financing in their respective sectors. The guidelines are not legally binding.

K

KYBP - Know Your Business Partner

This is about understanding which parties you work with as an organization (suppliers) and which parties influence the organization. Technologically, it's about fuzzy and phonetic search, profiling, identity verification, digital due diligence, and more.

KYC - Know Your Costumer

It is about understanding who you do business with and identifying and managing these relationship and business risks, which are not necessarily but often linked to operations and compliance risk management. This involves subjecting (new) customers of a financial institution to a thorough business and personal data review. The purpose of this customer screening is to prevent economic crime (money laundering, terrorist financing, corruption, etc.) on the basis of the anti-money laundering laws in force in the respective countries.

KYCC - Know Your Customer's Customer

KYCC is the enhanced KYC process. In order to minimize the risks of financial crime, data about the own customer's customers is collected and analyzed so that it becomes comprehensible with whom the own customer does business.

KYE - Know Your Employee

Understand who your employees are and what their backgrounds are. The KYE process is designed to identify behavioral anomalies in an employee.

KYT - Know Your Transaction

Detecting high-risk and abnormal transactions by analyzing transaction data that is difficult to manipulate.

M

MaRisk - Minimum Requirements for Risk Management

German credit institutions are subject to BaFin (German Federal Financial Supervisory Authority). The BaFin has issued minimum requirements for risk management that are binding for all credit institutions in Germany.

Match

If a hit is obtained after a screening process in which the system compares its own (customer-)database with the (inter-)national sanctions lists, this hit is referred to as a target match.

MENAFATF - Middle East and North Africa Financial Action Task Force

An FATF-style regional body in the Middle East and North Africa.

MER - Mutual Evaluation Report

The FATF describes "mutual evaluation" as follows: FATF mutual evaluations are in-depth country reports analysing the implementation and effectiveness of measures to combat money laundering and terrorist financing. Mutual evaluations are peer reviews, where members from different countries assess another country. A mutual evaluation report provides an in-depth description and analysis of a country’s system for preventing criminal abuse of the financial system as well as focused recommendations to the country to further strengthen its system.

ML - Money Laundering

Money laundering is the process of introducing illegally generated funds or assets into the legal financial or economic circuit in a disguised manner. In this process, the origin, movement, and destination of the money are kept hidden by distributing the money flows and disguising them as legal holdings. Widely used are the 3 phases of money laundering:

  1. Placement - This involves getting the money into the economic circuit, this is often done through straw men who, for example, deposit funds in small amounts into a variety of accounts.
  2. Layering - The objective of layering is to ensure that no connection to the crime can be established. This is achieved through many, complex, non-transparent transactions.
  3. Integration - integration closes the loop, as the money is now legitimized, through created receipts and certificates, moving in the economic cycle and can no longer be linked to a crime, but can now be used as purely legitimate money.

MLRO - Money Laundering Reporting Officer

Money Laundering Officers deal with the implementation and monitoring of the anti-money laundering program in companies, acting as a point of contact for all official law enforcement and regulatory authorities involved in combating money laundering. In order to perform their duties, they are given access to all relevant information and resources and are required to report directly to management.

MONEYVAL - Committee of Experts on the Evaluation of Anti-Money Laundering Measures

The Committee of Experts defines itself as follows: The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism - MONEYVAL is a permanent monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism and the effectiveness of their implementation, as well as with the task of making recommendations to national authorities in respect of necessary improvements to their systems.

MSB - Money Services Business

A natural or legal person who is engaged in one or more of the following activities on a business regular or non-regular basis, and whose main activity is the conversion or transfer of money. From a conversion of 1000$ per day, the threshold is reached and this/these person/company is an MSB and is subject to national and international money services regulations. The following activities are listed:

  1. Foreign exchange dealer or exchanger
  2. Check cashing agent
  3. Issuer of traveler's checks, money orders, or securities
  4. Seller or redeemer of traveler's checks, money orders, or securities
  5. Money transmitter
  6. U.S. Postal Service

MVTS - Money Value Transfer Services

MVTS are service providers that accept cash, checks, remittance documents, etc., either store the value, or transfer it to the beneficiary by means of remittance, clearing. They may be natural or legal persons regulated by the Money Services Authority on the basis of their activities.

N

Name Screening

Part of the monitoring process by screening the internal data set (customer master data or counterparty master data) against a sanctions list. In terms of due diligence and KYC, this is mandatory when onboarding any customer (for all institutions covered by this regulation).

O

OECD - Organization For Economic Cooperation and Development

The OECD's mission is better policies for a better life. The organization supports its 37 member states in matters of economy, development and cooperation. The predecessor of this organization was the OEEC, which was limited to the European area.

OFAC - Office of Foreign Assets Control

The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United​ States.

Offshore Banking License

A license that conditions that the respective banks are not allowed to do business with local citizens or in local currencies.

Offshore Financial Center

Locations in the Caribbean or Mediterranean islands where there is a minimal requirement for financial market regulation and supervision. An OFC is a country or jurisdiction that provides financial services to nonresidents on a scale that is inappropriate to the size and financing of its domestic economy. OFCs are known for their secrecy and as tax havens with a minimal income tax rate.

OSFI - Office of the Superintendent of Financial Institutions

The Office of the Superintendent of Financial Institutions (OSFI) is an independent federal agency that regulates and supervises more than 400 federally regulated financial institutions and 1,200 retirement plans to determine whether they are in sound financial condition and meet their requirements.

P

PTA - Payable through Account

A correspondent account that is maintained by a U.S. financial institution for a foreign financial institution. The foreign bank's customers, usually associated with U.S. banking, are authorized to conduct banking transactions, either directly or through a sub-account.

PCI DSS - Payment Card Industry Data Security Standard

Regulations for all companies and institutions that permit credit cards as a means of payment and therefore process, store and transmit credit card data. The aim of the regulations is to reduce fraudulent credit card use, especially on the Internet.

PCI SSC - Payment Card Industry Security Standards Council

The Security Standards Council was established with the goal of ensuring the security of payment account data worldwide through the development of standards.

PEP - Politically Exposed Person / Politisch exponierte Person

According to the FATF, politically exposed persons are: Individuals who are or have been entrusted domestically with are or have been entrusted with prominent public functions, for example, heads of state or government, senior politicians, senior governmental, judicial, or military senior government, judicial, or military officials, senior executives of state-owned enterprises, key political Party officials. It is the same with politicians from other countries, as well as for persons holding high office in an international organization.

Ponzi Scheme

A form of fraud in which investors are led to believe they are receiving unusually high returns through legitimate business practices. Investors were paid according to the Ponzi scheme, so that the income from new investors would cover the returns paid by younger investors until the scheme fell apart. The Ponzi scheme can be traced back to Italian immigrant Charles Ponzi, who entered the U.S. in 1903 and started his scam there.

PSP - Payment Services Provider

Companies that provide technical interfaces for online payment methods. Examples are: PayPal, GiroPay, ApplePay, etc.According to the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG), all companies that offer payment services on a commercial basis and are not banks themselves, are payment service providers.

PSD2 - Payment Services Directive 2

Directive, which enables payment service providers with corresponding certificates within the EU to also offer their payment services via the Internet. To this end, banks must provide an interface so that account and payment data can be processed. The aim of the directive is to ensure the security of payment transactions at EU level and to boost competition in this market, as new providers can now also enter.

R

RBA - Risk-based Approach

The risk-based approach according to FATF: The risk-based approach is central to the effective implementation of the FATF Recommendations. A risk-based approach means that countries, competent authorities, and banks identify, assess, and understand the money laundering and terrorist financing risk to which they are exposed, and take the appropriate mitigation measures in accordance with the level of risk. This flexibility allows for a more efficient use of resources, as banks, countries and competent authorities can decide on the most effective way to mitigate the money laundering / terrorist financing risks they have identified. It enables them to focus their resources and take enhanced measures in situations where the risks are higher, apply simplified measures where the risks are lower and exempt low risk activities. The implementation of the risk-based approach will avoid the consequences of inappropriate de-risking behaviour.

RCA - Relative or Close Associate

Relatives or friends who have a close relationship with a PEP are themselves referred to as PEPs under the FATF.

Red Flag

A red flag is an indicator of suspicious cases, such as being a fraudulent customer, or a fraudulent action/transaction.

RegTech - Regulation Technology

RegTech refers to software that supports companies in meeting their complex compliance requirements. The functions include, in addition to compliance, the monitoring of regulatory requirements, reporting to the relevant authorities.

Remittance Services

A payment service that provides cash to a third party without an account, across borders. In this process, funds in the form of cash / wire transfer are given by the sender to the payment service provider, who initiates a payment to the desired destination country. The recipient must show identification at the relevant payout point and can take the money in cash. This often happens in countries where individual family members go to other countries as guest workers and make remittances from there back home to support the family. The most common places this happens include India & Chile.

Reputational Risk

Reputational risk is the potential risk that public negative reports about the business practices of associations or financial institutions may lead to a direct loss of confidence in the respective institution.

Risk Assessment

A risk assessment is the identification, analysis and provision of measures and processes to mitigate a risk. Unassessed risks can have a negative impact on day-to-day operations and, in extreme cases, lead to the discontinuation of business activities. Undetected or unassessed risks can have not only economic-financial consequences, but also legal implications.

RiskTech - Risk Technology

Technology in the field of risk detection, analysis and assessment. The software supports risk discovery in data.

S

Sanctions Compliance

Country-specific sanctions regulations serve to drive national security and their foreign policy agenda. The rapidly changing international regulations pose a challenge for companies in all industries to adapt to developments in a timely manner.

Sanctions Evasion

The deliberate attempt to execute a transaction with a counterparty designated as sanctioned. This may be sanctioned persons, countries, companies or places. The transacation is disguised in such a way that the information is not discovered. If the transaction was executed without error message, the sanction evasion has worked.

Sanctions List

A list on which are sanctioned persons, groups of persons, companies, countries and places where it is forbidden to do business with.

SAR - Suspicious Acitivity Report

The report contains alerts from the system/program that certain activities have been identified as suspicious. Depending on the country, different criteria determine when a SAR must be submitted and to whom.

SCP - Sanctions Compliance Program

The program supports companies in complying with sanctions guidelines and thereby reduces the risk of sanctions. OFAC has published 5 essential components of an effective SCP: 1. management commitment, 2. risk assessment, 3. internal controls, 4. testing and auditing, 5. training.

SDD - Simplified Due Diligence

To the extent permitted by national legislation, firms may apply SDD measures in situations where the ML/TF risk associated with a business relationship has been assessed as low. SDD is not an exemption from any of the CDD measures; however, firms may adjust the amount, timing or type of each or all of the CDD measures in a way that is commensurate to the low risk they have identified.

SDD - Sanctions Due Diligence

The SDD process is similar to CDD / KYC, but this covers the risks associated with a sanction, considering governance and risk assessment. SDD builds on the KYC data and, as with the KYC process, is applied throughout the customer lifecycle.

SDN (List) - Specially Designated Nationals And Blocked Persons List

A list published by OFAC that lists individuals or companies owned or controlled by, or acting for or on behalf of, one of the targeted countries. It also lists individuals, groups, and companies, such as terrorists and drug traffickers, designated under programs that are not country-specific. The assets of the listed individuals or entities are frozen and U.S. citizens are generally prohibited from doing business with them.

SEPA - Single European Payments Area

With SEPA (Single European Payment Area), new, Europe-wide standardized procedures for cashless payments (credit transfers, direct debits, card payments) were also introduced in Germany. They can be used for euro payments in the 27 EU member states, Iceland, Liechtenstein, Norway as well as Monaco, Switzerland, San Marino, Andorra, the Vatican City State and the United Kingdom.

SIPs - Special Interest Persons

SIPs are very similar to PEPs as they usually hold high-level positions and pose a high risk of money laundering. This results either from the connections of these individuals to people associated with financial crime, or the suspicion of money laundering, or the fact that this person has already been convicted of financial crime or the investigations are still ongoing.

SMR - Suspicous Matters Report (Australia)

The SMR is the Australian counterpart to the U.S. SAR and STR. If a person, company or transaction is suspected of being connected to financial crime, the report must be filed between 24 hours and 3 business days, depending on the severity of the suspected offense.

SPI - Small Payment Institution

In U.K., an SPI becomes an SPI and is allowed to legally offer its services only upon successful registration and acceptance by the FCA into the Financial Services Register.

SSI (List) - Sectoral Sanctions Identification List

The SSI is similar to the SDN, but not all persons, companies, etc. that are on the SSI list are automatically also on the SDN list. The sectoral list therefore refers to individuals and companies that operate in a certain sector. For example, Russia was sanctioned by the U.S., so several Russian persons/companies are on the SSI list.

STR - Suspicous Transaction Report

Similar to the SAR, the STR is a report containing information on unusual and suspicious transactions. It also depends on the country when and with which requirements this report has to be submitted.

SCA - Strong customer authentication

European requirement under PSD2 that payment service providers have to ensure strong customer authentication before processing the transaction. Four different characteristics, currently very common, can be requested.

  1. something the customer knows (pin/password).
  2. something the customer owns (cell phone, laptop, etc.).
  3. something the customer is (fingerprint, facial recognition).
  4. the location the customer is in.

T

Targeted (financial) sanctions

Sanctions against a specific target in the form of financial or trade restrictions that focus on restricting freedom of movement and assets (frozen assets). Sanctions can be unilateral, imposed by a single country, or multilateral, imposed by several countries simultaneously.

TBML - Trade-Based Money Laundering

The FATF defines trade-based money laundering as the process of concealing the proceeds of crime and shifting value through the use of trading transactions in an attempt to legitimize their illicit origins.

TF - Terrorist Financing

The provision of (financial) resources or other support to individuals or organizations intending to conduct a terrorist act. Terrorists are usually financed through illegal activities such as: human trafficking, smuggling or fraud, and supported either by countries, organizations or individuals.

Three-party system

A payment system (online, or card payment) with three parties involved: 1. the cardholder (the payer) 2. the merchant (the payee) 3. the payment service provider operating the payment system. Examples include: American Express, PayPal, etc.

TI - Transparency International

Transparency International describes itself as follows: Transparency International is a nonprofit, nonpartisan movement of like-minded people from around the world dedicated to the global fight against corruption. Transparency International was founded in 1993 by Dr. Peter Eigen and his comrades-in-arms in London and Berlin, and is active internationally.

TM - Transaction Monitoring

Is the process of monitoring a customer's transaction (in real time/batch ) and examining it for suspicious data, and in the event of suspected money laundering or terrorist financing, generating a report.

TS - Transaction Screening

The process of screening a transaction before it is executed and, for example, investigating unusual activity on an account in order to issu a report in the event of suspicion.

U

Underground Banking

Conducting banking business or financial service without entry in the register and without permission.

Unilateral Sanctions

Sanctions imposed by an individual state as a result of domestic rule violations.

U-Turn Payment

A prohibited type of transaction where the transaction passes through at least 3 financial institutions. An example of this is a remittance from the U.S. to Iran through an offshore bank in Switzerland.

V

Value Transfer Service

See Money Value Transfer Services

Virtual Asset

The FATF describes virtual assets as follows: innovative technology for the rapid transfer of value around the world. The rapidly evolving blockchain or distributed ledger technologies have the potential to radically change the financial landscape. But their speed, global reach and, most importantly, anonymity expose them to appropriate criticism.

VC - Virtual Currency

BaFin defines virtual currency as follows: VC as a digital representation of value that is not created by a central bank or authority, and does not need to have a link to legal tender. VC are used by natural and legal persons as a medium of exchange and can be transferred, held in custody or traded electronically.

W

Willful Blindness

The failure to investigate or prosecute although there is reasonable suspicion of a criminal offense.

Wire transfer

A system in which money is transferred from one financial institution to another.

Wolfsberg Group

The Wolfsberg Group is an association of thirteen global banks which aims to develop frameworks and guidance for the management of financial crime risks.