Welcome to our essential AML Dictionary, a valuable resource for anyone interested in Anti-Money Laundering (AML) and financial crime. Whether you’re a student, professional, or simply curious about the field, this encyclopedia offers an in-depth look into over 500 key AML terms and concepts. From foundational phrases like “Audit Trail” and “AML Compliance Program” to specialized terms such as “Attribution Analysis” and “Grandfathering Clause” our dictionary covers a broad spectrum of topics integral to understanding money laundering and its prevention.

Each term is clearly defined and elaborated upon, providing a clear understanding of its relevance in the context of AML regulations and procedures. The entries are meticulously organized and presented in alphabetical order for easy navigation. This is not just a glossary but a comprehensive guide designed to equip you with the knowledge and terminology needed to navigate the complex landscape of AML and related financial crime topics.

So whether you aim to become a specialist in the field, or simply want to get acquainted with the subject matter, this AML Dictionary is your go-to resource for accurate, detailed, and up-to-date information.

 

A

• Account-Based Model: An AML model that focuses on tracking and flagging unusual behavior at the account level rather than the transaction level.
• Account Monitoring: Continuous scrutiny of financial transactions to identify suspicious activity indicative of money laundering.
• Account Review: A thorough examination of a financial account to ensure that it complies with AML regulations.
• Accreditation: The certification provided to professionals who have shown expertise in AML protocols and compliance.
• Activity Reports: Internal or external reports created to document suspicious or unusual activity for review by compliance officers or regulators.
• Adjustment: In the context of AML, any changes or updates to customer profiles, risk levels, or transaction alerts that are based on new information or ongoing monitoring.
• Adverse Action: Steps taken by a financial institution when a potential or existing customer fails to meet AML compliance criteria, which can include account closure or reporting to authorities.
• Adverse Media Screening: The process of checking news sources and databases for negative information about potential or existing customers as part of due diligence in AML efforts.
• Advisory: Guidance or directives issued by AML regulatory bodies to financial institutions for compliance.
• Aggregate Transactions: Multiple transactions that are grouped together to evaluate whether they exceed reporting or recordkeeping thresholds under AML requirements.
• Aggregation: The combination of multiple transactions or entities for the purpose of AML analysis, often to discern patterns of behavior that individually would not be considered suspicious.
• Adequate Procedures: The term often used to describe the various compliance strategies and measures that a business needs to have in place to prevent money laundering and financial crimes.
• Affiliate Risk: The risk posed by entities that are related to or are a part of the same conglomerate, particularly when those affiliates are located in jurisdictions with weaker AML regulations.
• Agency Relationship: A type of business relationship where one entity acts on behalf of another, which may create money laundering risks if not properly managed.
• Agent: A person or entity authorized to act on behalf of another person or entity, such as in financial transactions that could potentially be subject to AML scrutiny.
• Alert: A warning or notification generated by an AML system indicating potential suspicious activity that may require further investigation.
• Alert Resolution: The process of investigating and resolving alerts generated by an AML monitoring system.
• Alert Systems: Automated or semi-automated systems designed to flag suspicious transactions or activities for further review in an AML context.
• Alternative Remittance System (ARS): Non-bank financial systems or networks by which value or funds can be transferred and received. These systems can pose an elevated risk of money laundering and are subject to AML regulations.
• Analysis Tools: Software or methodologies used to analyze transactions and behavior for signs of money laundering.
• Anonymous Transactions: Financial transactions where the identity of the involved parties is not disclosed, often scrutinized for potential money laundering.
• Anonymity: The state of being anonymous; relevant because anonymous transactions can be a red flag for money laundering.
• Anonymity Risk: The potential danger associated with transactions or accounts where the ownership is not clear or is deliberately obfuscated.
• Anti-Money Laundering (AML): The set of laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.
• AML Compliance Program: A set of internal policies, procedures, and protocols put in place by financial institutions to detect and report potentially illicit money laundering activities.
• AML Officer: A person within an organization who is responsible for ensuring compliance with AML regulations and reporting suspicious activities to the proper authorities.
• AML Policy: A set of internal guidelines and procedures designed to ensure that a business remains compliant with AML regulations.
• AML Risk Assessment: A formal evaluation to identify vulnerabilities within an organization’s operations that could make it susceptible to money laundering.
• Anti-Terrorism Financing: Often goes hand-in-hand with AML efforts, as the prevention of terrorism financing is a key objective of many AML programs.
• Anti-Terrorist Financing (ATF): Often goes hand-in-hand with AML to prevent the flow of funds to terrorist organizations.
• Applicability: In terms of AML, refers to the scope of entities or transactions to which AML laws and regulations apply.
• Applicable Law: The specific laws relevant to AML that vary by jurisdiction but generally require financial institutions to monitor, report, and keep records of certain types of financial transactions.
• Appeal Process: In some AML frameworks, there exists a mechanism to contest or appeal decisions such as asset freezes, risk classifications, or regulatory fines.
• Arrangement: Any plan or agreement made between two or more parties to facilitate financial transactions, often scrutinized for AML compliance.
• Assessment: The evaluation of a financial institution’s risk and compliance controls in the context of AML regulations.
• Asset Forfeiture: Legal process by which assets gained from money laundering activities are confiscated by authorities.
• Asset Recovery: The process of reclaiming assets that have been stolen or misappropriated, often involving cross-jurisdictional efforts.
• Asset Seizure: The confiscation of assets by government authorities as part of criminal or civil proceedings related to money laundering.
• Associated Risks: Pertains to the risks related to associates or business partners who may engage in actions that put the primary organization at risk for money laundering.
• Attribution Analysis: A technique used in AML compliance to attribute transactions or activities to specific customers or entities, helping to identify patterns or anomalies.
• Attestation: A formal declaration, often by an AML officer, confirming that a financial institution is in compliance with AML regulations.
• Authorities: Governmental organizations responsible for AML enforcement, such as the Financial Crimes Enforcement Network (FinCEN) in the United States.
• Automated Systems: Software solutions that automate many of the processes needed for AML compliance, including transaction monitoring, customer due diligence, and reporting.
• Automatic Identification System (AIS): Technologies used for automatically identifying and tracking account activities that might be suspicious.
• Auto-Confirmation: Automatic approval or acceptance of transactions that may sometimes bypass traditional AML checks.
• Authorized User: An individual who has been granted permission to access and operate an account, whose activities are subject to AML monitoring.
• Audit Trail: A record of all business transactions, often maintained so that an organization can respond to compliance checks by governmental organizations responsible for AML enforcement.
• Auditability: The capability of an AML process or system to be thoroughly reviewed and audited for compliance purposes.

B

• Back Office: Refers to the departments within a financial institution responsible for functions such as record maintenance, compliance, accounting, and settlements which play a role in AML compliance.
• Balance Monitoring: The practice of continuously checking account balances to spot unusual fluctuations that could indicate money laundering or other illicit activities.
• Bank Examination: A review or audit of a bank’s activities to ensure compliance with AML and other regulations.
• Bank Identifier Code (BIC): A unique identifier for a bank as defined by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), used in international wire transfers that may be scrutinized for AML compliance.
• Bank Identification Number (BIN): A unique number assigned to a bank that helps in identifying the institution behind a particular transaction. It is crucial for AML screening and monitoring systems.
• Bank Rating System (CAMELS): An international rating system some banks use to evaluate their performance. AML compliance might impact the “Management” and “Sensitivity to market risk” criteria.
• Bank Secrecy Act (BSA): U.S. legislation aimed at preventing money laundering and fraud by requiring financial institutions to maintain certain records and file certain reports that could be helpful to detect illegal activities.
• Bank Statement Reconciliation: The process of matching transactions and balances from bank statements with internal financial records as part of AML monitoring activities.
• Banking Secrecy: A legal principle allowing banks to protect the identity and personal financial information of their customers. This can sometimes be at odds with AML requirements, which call for transparency.
• Barriers to Entry: In an AML context, this refers to the legal or regulatory requirements that make it difficult for money launderers to exploit financial systems.
• Basel Committee: Refers to the Basel Committee on Banking Supervision, an international regulatory body that sets standards for the prudential regulation of banks, including AML policies.
• Baseline Assessment: An initial analysis used to measure compliance with AML requirements or to determine the normal level of activity for a particular type of account or customer.
• Batch Processing: Automated or semi-automated processing of multiple transactions, often analyzed for AML compliance.
• Batch Screening: A process of running multiple profiles through AML databases in one go, often used by financial institutions to streamline their compliance efforts.
• Bearer Negotiable Instruments: Monetary instruments such as traveler’s checks or bearer bonds that are considered high-risk for money laundering because ownership is easily transferred from one person to another.
• Bearer Shares: Equities ownership that is conferred by possession of physical certificates, thereby obscuring the true owner, often scrutinized under AML regulations.
• Benchmarking: The process of comparing one’s business processes and metrics to industry bests to determine how the measured processes and metrics stack up, often used in the context of AML compliance.
• Beneficial Ownership: Refers to the natural person(s) who ultimately owns or controls a customer or on whose behalf a transaction is being conducted.
• Beneficiary: The individual or entity that is the recipient of funds, often examined in the context of AML compliance to determine the legality of a transaction.
• Behavioral Analytics: The use of technology to study behavioral patterns in financial transactions to identify suspicious activities that may require further investigation under AML laws.
• Black Money: Income illegally obtained or not declared for tax purposes, often scrutinized under AML regulations.
• Blacklist: A list of individuals, entities, or countries that are prohibited from certain activities or transactions due to AML or other compliance regulations.
• Blockchain: The decentralized digital ledger technology behind cryptocurrencies like Bitcoin, scrutinized for its potential to facilitate money laundering.
• Blocked Account: An account that has been identified for suspicious activities and is prevented from conducting further transactions until it is either cleared or confirmed for illegal activities.
• Blind Eye Policy: Turning a blind eye to suspicious activities often against AML laws and principles. This is often considered a severe negligence or misconduct in terms of compliance.
• Blind Trust: A trust in which the fiduciaries, usually a trustee, have full discretion, and the trust beneficiaries have no knowledge of the holdings of the trust. These are often examined closely under AML guidelines.
• Boiler Rooms: Call centers or physical locations used to conduct various types of fraud including share scams and can be linked to money laundering activities.
• Border Reports: Reports made by individuals or entities when carrying currency or monetary instruments across borders, as required by certain jurisdictions to prevent money laundering.
• Booking Center: A location where financial transactions are processed, which may be different from the location where the services are provided. Often subject to AML regulations.
• Bottom-up Risk Assessment: An AML risk assessment strategy that starts at the transactional or operational level and works its way up to a broader organizational level.
• Bribery: An illegal practice involving the giving or receiving of money or gifts to influence actions, which can be related to money laundering activities.
• Bridged Transaction: A transaction where a party acts as an intermediary between a buyer and a seller, sometimes scrutinized in AML compliance to ensure it isn’t a strategy to obscure the nature of the transaction.
• Brick-and-Mortar: Traditional physical institutions like banks, as opposed to online-only institutions. Both types have different AML challenges.
• Broker-Dealer: Entities that are in the business of trading securities for their own account or on behalf of customers, and are thus subject to specific AML obligations.
• Budget Laundering: A form of money laundering where illicit funds are mingled with legitimate public funds in the budgeting process, often at the government level.
• Bulk Cash Smuggling: The physical illegal movement of large amounts of cash from one location to another, often crossing borders, to evade detection or reporting requirements.
• Bundling: The act of making smaller transactions to avoid detection mechanisms in AML systems, also known as structuring or smurfing.
• Business Continuity Planning: In AML, this refers to plans made to continue essential business operations in case of failures, system breaches, or during investigation periods.
• Business Relationship: Ongoing association between the financial institution and the client, subject to AML regulations.
• Business Risk Assessment: Evaluation of the risks that a business might be used for money laundering or financing terrorism. This assessment is a core part of a company’s AML program.

C

• Cash Intensive Business: Businesses that primarily deal in cash transactions, often at higher risk for money laundering.
• CDD (Customer Due Diligence): The process of verifying the identity of customers and assessing their risk profile to prevent money laundering and fraud.
• Centralized Recordkeeping: Maintaining comprehensive records of customer transactions and AML activities.
• Clearing House: An intermediary financial institution that facilitates payments and settlements between banks, which can be vulnerable to money laundering activities.
• Client Acceptance Policy: A policy that outlines the criteria for onboarding new customers and the AML checks that must be performed before establishing a business relationship.
• Client Screening: The process of checking clients against AML watchlists and sanctions lists to identify high-risk individuals or entities.
• Compliance: The process of adhering to AML laws and regulations to prevent money laundering and terrorist financing.
• Compliance Officer: An individual responsible for ensuring that an organization adheres to AML regulations and policies.
• Compliance Program: A comprehensive set of policies, procedures, and internal controls that financial institutions and other covered entities must establish to comply with AML regulations.
• Concentration Risk: The risk associated with a financial institution having too many high-risk customers in its portfolio.
• Confidentiality: A key AML principle involving keeping customer information and AML investigations confidential.
• Consolidated Supervision: A regulatory approach in which a single supervisory authority oversees the AML compliance of an institution’s global operations. This helps ensure consistent AML standards across borders.
• Counterparty Due Diligence: The process of assessing the AML risk associated with counterparties in financial transactions, such as business partners or customers.
• Counterparty Risk: The risk of engaging with a business or individual involved in money laundering or other illegal activities.
• Corporate Veil: The legal concept that can be abused for money laundering by hiding the true ownership of assets through shell companies.
• Correspondent Account: An account that one financial institution holds on behalf of another financial institution, often involving international transactions. Managing correspondent accounts is essential for AML compliance.
• Correspondent Banking: A relationship between financial institutions that may involve cross-border transactions and carries AML compliance obligations.
• Corruption: A predicate offense often associated with money laundering, where individuals abuse their power for financial gain.
• Covered Entity: Financial institutions and businesses required by law to have AML programs in place.
• Crisis Response Plan: A plan that outlines how a financial institution will respond to a money laundering or terrorist financing incident, including reporting it to relevant authorities.
• Cross-Border Payment: Financial transactions that involve the movement of funds across international borders, which can raise AML concerns due to potential jurisdictional differences and risks.
• Cross-Border Transactions: Financial transactions that cross international borders and may be subject to AML regulations.
• Cryptocurrency: Digital or virtual currencies like Bitcoin that can be used for money laundering and require AML regulations in some jurisdictions.
• Cryptocurrency Exchange: Platforms where cryptocurrencies are bought, sold, or traded, subject to AML regulations.
• CTR (Currency Transaction Report): A report submitted to financial authorities when a cash transaction exceeds a certain threshold, as part of AML compliance.
• CTR Exemptions: Certain transactions or entities that are exempt from currency transaction reporting requirements.
• CTR Threshold: The monetary amount at which financial institutions are required to report cash transactions to authorities.
• Currency and Monetary Instrument Report (CMIR): CMIR is similar to a CTR but is used for reporting the physical transportation of currency and monetary instruments across international borders. It is crucial for tracking potential money smuggling.
• Currency Exchange: Businesses or entities that provide currency exchange services and must comply with AML regulations.
• Currency Exchange Rate Risk: The risk associated with fluctuations in exchange rates, which can affect the value of assets and transactions relevant to AML efforts.
• Currency Restriction: Legal limits on the amount of currency that can be transported across international borders, designed to prevent money smuggling.
• Currency Smuggling: Illegally moving physical currency across borders to avoid AML scrutiny.
• Customer Identification Program (CIP): The CIP is a fundamental component of AML compliance, requiring financial institutions to verify and record the identity of their customers.
• Customer Risk Assessment: The process of evaluating the risk posed by individual customers to determine the level of AML due diligence required.

D

• Dark Pool: Private trading venues where large blocks of securities are bought and sold anonymously, which can be used for illegal activities and AML concerns.
• Dark Web: A part of the internet that is intentionally hidden and not indexed by traditional search engines, often used for illegal activities, including money laundering.
• De-Risking: The practice of financial institutions reducing their exposure to high-risk customers or jurisdictions to minimize AML compliance obligations and potential legal liabilities.
• Defalcation: The misappropriation of funds entrusted to an individual or entity, which can be a red flag for money laundering.
• Deferred Prosecution Agreement (DPA): An arrangement between a prosecutor and an organization that allows the organization to avoid criminal charges by meeting certain AML compliance requirements.
• Dematerialization: The process of converting physical securities (e.g., stock certificates) into electronic or digital form, which can impact AML monitoring.
• Depersonalization: The practice of anonymizing customer data to protect privacy while still allowing for AML analysis and reporting.
• Depository Institution: Financial institutions, such as banks, that accept deposits from customers, making them subject to AML regulations and reporting requirements.
• Designated Non-Financial Business or Profession (DNFBP): Entities or individuals outside the traditional financial sector, such as lawyers, accountants, and real estate agents, who are subject to AML regulations due to their potential involvement in financial transactions.
• Detection: The phase in AML compliance where suspicious activities or transactions are identified through various monitoring and reporting mechanisms.
• Digital Currency: A form of currency that exists only in digital form and can be used for financial transactions, posing AML challenges due to its anonymity.
• Digital Forensics: The process of collecting, analyzing, and preserving digital evidence, often used in AML investigations to trace money laundering activities online.
• Digital Identity: The electronic representation of an individual’s identity used for online transactions, which can play a role in AML verification processes.
• Digital Identity Verification: The process of electronically verifying the identity of customers, often through the use of biometrics, government-issued IDs, or other electronic means.
• Digital Onboarding: The process of enrolling new customers electronically, often used in online banking and financial services while adhering to AML and KYC (Know Your Customer) requirements.
• Discretionary Account: An account in which an investment advisor or broker has the authority to make investment decisions on behalf of the account holder. These accounts are monitored for potential misuse in AML efforts.
• Disguised Compliance: A situation in which individuals or entities attempt to conceal their true intentions and activities, making it difficult to detect AML violations.
• Dodd-Frank Act: A U.S. federal law that includes provisions related to AML and the regulation of financial markets.
• Document Exploitation (DocEx): The process of analyzing and extracting information from documents, often used in AML investigations to gather evidence.
• Documentation Requirements: The records and documentation that financial institutions must maintain to demonstrate compliance with AML regulations.
• Domicile: The legal residence or location of an individual or entity, which can affect AML regulations and reporting requirements.
• Dual Banking System: A financial system in which both state and federal authorities regulate and supervise financial institutions. This can create complexities in AML compliance.
• Dual-Use Goods: Items or technologies that can have both civilian and military applications, which are monitored to prevent their misuse in money laundering or terrorist financing.
• Due Diligence: The process of conducting thorough investigations and assessments to verify the identity of customers, assess their risk level, and ensure compliance with AML regulations.
• Due Process: The legal procedures and safeguards that protect the rights of individuals and entities during AML investigations and enforcement actions.
• Dynamic Currency Conversion (DCC): A service offered by merchants and financial institutions that allows customers to pay for goods and services in their own currency when using foreign credit or debit cards, which can introduce AML risks.
• Dynamic Risk Assessment: An ongoing evaluation of the AML risk associated with customers and transactions, allowing for real-time adjustments to compliance measures.

E

• E-Government: The use of electronic technologies and digital platforms by governments to provide public services, which can have implications for AML efforts.
• E-Government Services: Government services provided online, which may require AML measures to verify the identity of individuals using digital platforms for official transactions.
• Economic Sanctions: Measures imposed by governments or international organizations to restrict or prohibit financial transactions with specific countries, entities, or individuals for various reasons, including AML and counter-terrorist financing efforts.
• Effective Sanctions Compliance Program: A program established by financial institutions to ensure compliance with economic sanctions, including screening transactions and maintaining proper records.
• Egmont Group: An international network of financial intelligence units (FIUs) that collaborate in the fight against money laundering and the financing of terrorism.
• Electronic Funds Transfer (EFT): The electronic movement of funds from one financial institution to another, which is subject to AML monitoring and reporting.
• Electronic Identification (e-ID): Digital methods for verifying the identity of customers, which can streamline AML compliance processes.
• Emerging Risk: Potential AML risks associated with new or evolving financial products, technologies, or trends, such as cryptocurrencies or virtual assets.
• End User Verification: The process of verifying the identity and legitimacy of the ultimate recipient or user of a product or service, particularly relevant in AML when dealing with cross-border trade and export controls.
• Enforcement Action: Legal actions taken by regulatory authorities or law enforcement agencies against financial institutions or individuals for AML violations, including fines and penalties.
• Enhanced Due Diligence (EDD): A higher level of scrutiny and investigation applied to customers or transactions that are deemed to pose a higher risk of money laundering or terrorist financing.
• Enhanced Transaction Monitoring: An advanced approach to tracking and analyzing financial transactions, often involving automated systems and algorithms to detect suspicious activities.
• Entity Customer: A business or organization that is a customer of a financial institution and is subject to AML regulations, including identity verification and risk assessment.
• Equity Financing: A method of raising capital by selling ownership shares in a company, which can be subject to AML regulations and monitoring.
• Escrow Account: An account where funds are held by a third party until certain conditions are met, which can be relevant to AML investigations.
• Escrow Agreement: A legal contract specifying the conditions under which funds held in escrow will be released, important for AML documentation.
• Event-Driven Compliance: An approach to AML compliance that focuses on adapting to and responding to specific events, such as changes in regulations or emerging threats.
• Evidence-Based Approach: An AML strategy that emphasizes making decisions and implementing controls based on empirical evidence and risk assessments rather than relying solely on prescriptive rules.
• Examiner: A regulatory authority or internal auditor responsible for reviewing and evaluating a financial institution’s AML compliance program.
• Examination Manual: A guide or handbook provided by regulatory authorities to assist financial institutions in understanding and implementing AML compliance requirements.
• Examination Scope: The specific areas and aspects of a financial institution’s operations that are subject to review during an AML examination or audit.
• Excluded Person: An individual or entity that is explicitly exempted from AML reporting requirements or certain regulations.
• Exempt Person: An individual or entity that is not subject to certain AML regulations due to specific criteria, such as low-risk status or small transaction volumes.
• Exit Strategy: A plan for terminating a business relationship with a customer or entity, often developed in the context of AML compliance when risk factors increase.
• Exotic Financial Products: Complex financial instruments and products that may be used for money laundering due to their opacity and high-risk nature.
• Export Controls: Regulations that restrict the export of certain goods and technologies to prevent them from being used in illegal activities, including money laundering.
• External Audit: An independent examination of a financial institution’s AML compliance program and controls conducted by an external auditing firm.
• External Data Sources: Third-party databases and information providers used by financial institutions for AML purposes, including customer due diligence and enhanced due diligence.
• Extraterritorial Jurisdiction: The ability of a country to enforce its AML laws and regulations beyond its own borders, especially relevant when financial institutions operate internationally.
• Exigent Circumstances: Legal or practical situations that may require immediate action in AML investigations, even without full compliance with usual procedures, to prevent harm or loss.
• Evasion: The act of deliberately attempting to avoid AML reporting requirements or concealing the true nature of financial transactions.
• Evasion Red Flags: Indicators or patterns of behavior that suggest an attempt to evade AML regulations, such as structuring transactions to avoid reporting thresholds.

F

• False Beneficial Ownership: The act of concealing the true owners or beneficiaries of assets or funds, often through complex legal structures, trusts, or nominee directors, to facilitate money laundering.
• False Positive: A situation in which an AML system or process incorrectly flags a legitimate transaction or customer as suspicious.
• FATF (Financial Action Task Force): An intergovernmental organization that sets global standards and promotes policies to combat money laundering, terrorist financing, and other financial crimes.
• FATF-Style Regional Bodies (FSRBs): Organizations established in various regions to promote the implementation of FATF’s AML standards and conduct mutual evaluations.
• Fictitious Business: A business entity created for the purpose of laundering money or conducting other illegal activities while maintaining a facade of legitimacy.
• Fictitious Name Account: An account opened under a fictitious or false name, commonly used in money laundering to hide the true owner’s identity.
• FinCEN (Financial Crimes Enforcement Network): A bureau of the U.S. Department of the Treasury responsible for collecting and analyzing financial transaction data to combat money laundering and other financial crimes.
• Fincen 314(a) Search: A search of the Financial Crimes Enforcement Network (FinCEN) database conducted by financial institutions to identify accounts and transactions involving individuals or entities suspected of money laundering or other financial crimes.
• Financial Intelligence Unit (FIU): A government agency responsible for receiving, analyzing, and disseminating financial information to combat money laundering, often as part of a country’s AML efforts.
• Financial Privacy: The protection of an individual’s financial information and transaction data, which must be balanced with AML requirements for transparency.
• FinTech Sandbox: A regulatory framework that allows FinTech companies to test innovative financial products and services under controlled conditions while complying with AML and other regulations.
• Foreign Account Tax Compliance Act (FATCA): U.S. legislation that requires foreign financial institutions to report financial accounts held by U.S. taxpayers, with AML and tax implications.
• Foreign Asset Control Regulations (FACR): Regulations that restrict financial transactions with individuals and entities on sanctions lists, important for AML compliance when dealing with international parties.
• Foreign Corrupt Practices Act (FCPA): A U.S. law that prohibits bribery of foreign officials and has AML implications, as corrupt funds may be laundered.
• Foreign Exchange (Forex) Market: A decentralized global market for trading currencies, which can be subject to AML regulations due to its potential for money laundering.
• Foreign Financial Institution (FFI): A financial institution located outside the United States that is subject to AML regulations and reporting requirements when dealing with U.S. clients.
• Foreign Official: A government official or representative of a foreign country, whose interactions with financial institutions may raise AML concerns, especially in cases of potential bribery and corruption.
• Foreign PEP (Politically Exposed Person): A PEP from a foreign country, often subjected to higher levels of AML scrutiny due to their potential influence and risk of corruption.
• Foreign Shell Bank: A financial institution that has no physical presence in any country, posing a high risk for money laundering, and is prohibited in many AML regimes.
• Forensic Accounting: The use of accounting techniques and investigative skills to analyze financial records and transactions for evidence of financial crimes, including money laundering.
• Forensic Audit: An in-depth examination of financial records and transactions, often used in AML investigations to trace the flow of illicit funds.
• Forensic Interview: An interview conducted as part of a financial investigation, often used in AML cases to gather evidence and information from individuals involved.
• Form 8300: A U.S. Internal Revenue Service (IRS) form that must be filed by businesses and individuals when they receive cash payments exceeding a certain threshold, important for AML reporting.
• Forfeiture: The legal process by which authorities seize assets or funds that are believed to be proceeds of criminal activity, including money laundering.
• Fraudulent Conveyance: The illegal transfer of assets or funds to evade creditors, taxes, or legal obligations, often involving money laundering elements.
• Front Company: A legitimate-seeming business used by criminals to disguise the true source or destination of funds in money laundering schemes.
• Front-Running: The unethical practice of executing orders on a security or commodity for one’s own account while taking advantage of advance knowledge of orders from other parties, which can be linked to money laundering.
• Fugitive Disentitlement Doctrine: A legal principle that can prevent individuals who are fugitives from justice from claiming ownership rights over assets, potentially connected to money laundering.
• Funding Source: The origin of funds used in a financial transaction, which must be scrutinized in AML due diligence to detect potential money laundering.
• Funds Flow Analysis: The examination of the movement of funds through various accounts and entities to identify suspicious or illicit financial activity.
• Futures and Options Market: Financial markets where derivative contracts, such as futures and options, are traded, which are subject to AML regulations.

G

• Gambling Anti-Money Laundering Group (GAMLG): A group that collaborates to combat money laundering and terrorist financing risks in the gambling sector.
• Gambling Commission: A regulatory authority responsible for overseeing and regulating gambling activities, including casinos, which may be subject to AML regulations.
• Gatekeeper: Individuals or entities that play a crucial role in facilitating financial transactions and may have AML responsibilities, such as lawyers, accountants, and notaries.
• Gateway Country: A country that serves as a major hub for financial transactions and may be a focal point for AML monitoring due to its role in global finance.
• Gateway System: A financial system or institution that serves as a point of entry or exit for funds into or out of a country, subject to AML monitoring.
• Geographical Risk Assessment: An evaluation of the AML risk associated with specific geographic regions or countries, considering factors such as their AML regulations and levels of corruption.
• Geolocation Analysis: The process of using geographic data and information to assess the risk associated with a particular location or transaction in AML efforts.
• Ghost Employee: A fictitious employee created on a company’s payroll for the purpose of laundering money through salary payments.
• Gift Card Laundering: A method of money laundering involving the purchase and redemption of gift cards to obscure the source of illicit funds.
• Global AML Watchlist: A compilation of individuals, entities, and jurisdictions that are of concern in the context of AML compliance and may be subject to enhanced due diligence.
• Global Beneficial Ownership Registry: A centralized database or platform that maintains records of beneficial owners of legal entities to enhance AML transparency.
• Global Exchange of Information: The sharing of AML-related information between countries and regulatory authorities to facilitate international cooperation in combating money laundering.
• Global Financial Integrity (GFI): A nonprofit organization that works to curtail illicit financial flows and promote AML efforts worldwide.
• Global Money Laundering: Money laundering activities that span multiple countries or jurisdictions, requiring international cooperation to combat effectively.
• Global Regulatory Framework: The collective set of AML regulations and standards established by international organizations and bodies, such as the FATF.
• Global Risk Assessment: An evaluation of AML risks on a global scale, considering threats that transcend borders and impact the international financial system.
• Global Risk-Based Approach: An AML strategy that assesses risks across all aspects of an organization’s operations, taking a holistic view to ensure comprehensive risk management.
• Global Sanctions List: A list of individuals, entities, and countries subject to economic sanctions and restrictions due to AML and other concerns.
• Global Trade Controls: Regulatory measures and policies aimed at preventing the misuse of trade finance for money laundering and terrorist financing.
• Global Trade Finance: The financial services and instruments used in international trade, which can be vulnerable to trade-based money laundering.
• Good Faith Exception: A legal principle that provides protection from AML liability when individuals or entities have acted in good faith but unknowingly violated AML regulations.
• Goods-Based Money Laundering: A method of money laundering involving the purchase and sale of physical goods to move and legitimize illicit funds.
• Government Intelligence Agency: A government agency responsible for collecting and analyzing intelligence related to national security, including potential AML threats.
• Governmental Advisory: Notifications and alerts issued by government agencies or international organizations regarding AML threats, sanctions, or emerging risks.
• Grandfathering Clause: A provision that allows certain existing customers or accounts to be exempt from new AML regulations, typically as a transitional measure.
• Grass Negligence: A legal standard used to determine AML violations when individuals or entities have shown a reckless disregard for AML requirements.
• Gray Market: An unofficial or unregulated market where goods or securities are bought and sold, which can pose AML risks due to lack of oversight.
• Group Beneficiary Ownership: A situation where multiple individuals or entities have a collective ownership interest in an account or asset, requiring detailed AML scrutiny.
• Group Exposure Limit: The maximum amount of risk a financial institution is willing to assume when dealing with a corporate group, factoring in AML risks.
• Group Risk Assessment: An evaluation of AML risks across an entire corporate group, taking into account the collective risk profile of all subsidiaries and entities.
• Group Structuring: The organization of businesses or entities into complex structures to facilitate money laundering, often involving multiple subsidiaries and shell companies.
• Group-Wide AML Program: A comprehensive AML compliance program that encompasses all subsidiaries and affiliated entities within a corporate group.
• Guilty Knowledge Test: A test used in AML investigations to determine if an individual had knowledge of the illegal origins of funds or assets.
• Guidance: Official documents and guidelines issued by regulatory authorities or industry bodies to assist financial institutions in interpreting and implementing AML regulations.
• Guideline Violation: Breach of internal AML policies and procedures within a financial institution, which may be subject to reporting and remediation.

H

• Hard Fork: In the context of cryptocurrencies, a significant and permanent change in the protocol or rules governing a blockchain, which can impact AML monitoring.
• Hawala: An informal money transfer system used in some regions that can be susceptible to money laundering and terrorist financing due to its lack of formal oversight.
• Hawala Dealer: An individual or entity that operates a hawala money transfer system and may be involved in facilitating illicit financial flows.
• Hawaladar: An individual or entity that operates within the hawala system, facilitating the informal transfer of funds, which can be used for illicit purposes and is a focus of AML scrutiny.
• Hawala Network: A network of hawaladars and intermediaries involved in the hawala money transfer system, which can be extensive and complex, presenting AML challenges.
• Hawala Transaction Record: Documentation associated with hawala transactions, which can provide evidence for AML investigations.
• Hedge Fund: An investment fund that pools capital from accredited or high-net-worth investors, which can be subject to AML regulations and monitoring.
• Hedging: A financial strategy used to mitigate risks, which can be misused in money laundering by disguising the origin of funds through legitimate financial transactions.
• High Risk Customer: An individual or entity that exhibits characteristics or behaviors that make them more susceptible to being involved in money laundering or other financial crimes.
• High-Value Dealer: Businesses or individuals that deal in high-value goods, such as jewelry or art, which may be susceptible to money laundering activities.
• High-Value Payment: A payment involving a significant sum of money, which may require enhanced AML scrutiny and reporting.
• Highly Liquid Asset: An asset that can be quickly and easily converted into cash, raising AML concerns when used to launder illicit funds.
• Hidden Beneficial Owner: An individual or entity that owns or controls assets or accounts but conceals their identity to evade AML scrutiny.
• Historical Transaction Data: Information on past financial transactions and activities, often used in AML investigations and risk assessments.
• Homeland Security Investigations (HSI): A division of the U.S. Department of Homeland Security responsible for investigating a wide range of crimes, including money laundering and financial fraud.
• Hot Money: Funds that are quickly moved between financial institutions or countries to conceal their origin or purpose, often used in money laundering schemes.
• Hot Money Flow: The movement of funds into or out of a jurisdiction for short-term, speculative purposes, often raising AML concerns due to rapid and large transactions.
• Hot Pursuit Doctrine: A legal principle that allows law enforcement to pursue criminals across borders without obtaining prior permission, potentially impacting AML investigations.
• Hot Wallet: In the context of cryptocurrency, a digital wallet that is actively connected to the internet and used for transactions, which can be targeted by hackers for illicit activities.
• Human Behavior Analysis: A component of AML risk assessment that involves studying and understanding typical and atypical behavior patterns of individuals and entities to detect suspicious activity.
• Human Intelligence (HUMINT): Intelligence gathered from human sources, often used in AML investigations to uncover illicit financial activities.
• Human Smuggling: The illegal transportation of individuals across borders, which can be associated with money laundering activities related to fees charged for the smuggling services.
• Human-Centric AML: An approach to AML compliance that emphasizes the importance of human judgment and expertise alongside technological solutions in detecting suspicious activity.
• Hybrid Cryptocurrency: A cryptocurrency that combines characteristics of both centralized and decentralized systems, which can pose unique AML risks and challenges.
• Hybrid Instrument: Financial instruments that combine features of debt and equity, which can be used in complex financial structures that may be susceptible to money laundering.
• Hypothecation: The practice of using an asset as collateral for a loan while retaining ownership, which can be a method of money laundering when used to obscure the source of funds.

I

• Identity Theft: The fraudulent acquisition and use of an individual’s personal information for financial gain, which can be linked to money laundering when it involves illicit funds.
• Illegal Enterprise: A criminal organization engaged in illegal activities, often using money laundering to legitimize the proceeds of their crimes.
• Illegal Proceeds: Money obtained through criminal activities, which is a primary target of money laundering schemes.
• Illicit Trade: The illegal trade of goods, often involving smuggling and money laundering to move the proceeds.
• In Person Deposits and Withdrawals: Transactions conducted face-to-face at a bank branch or other financial institution, which are subject to AML monitoring and reporting.
• Incumbent Financial Institution: A financial institution that is already established and operational, often subject to AML regulations when entering into new business relationships.
• Independent Audit: A thorough examination of a financial institution’s AML compliance program conducted by an external auditor to assess its effectiveness and adherence to regulations.
• Indicators: Red flags, patterns, or signs that suggest potential money laundering or illicit financial activities, which are used by AML professionals for detection and reporting.
• Individual Customer Risk Assessment: An evaluation of the AML risk associated with each customer, considering their profile, transactions, and behavior.
• Individual Retirement Account (IRA): A tax-advantaged retirement savings account in the United States, subject to AML regulations when used for certain financial transactions.
• Information Barrier: Internal controls and mechanisms within a financial institution to prevent conflicts of interest and unauthorized sharing of sensitive AML information.
• Information Sharing and Analysis Center (ISAC): Organizations or entities established to facilitate the sharing of information and threat intelligence related to cybersecurity and AML.
• Integrated Compliance: The practice of embedding AML compliance into a financial institution’s daily operations and decision-making processes.
• Integrated Regulatory Reporting: A streamlined approach to reporting that combines various regulatory requirements, including AML reporting, to reduce redundancy and enhance efficiency.
• Intelligence Sharing: The exchange of information and intelligence related to money laundering and financial crimes among different financial institutions, law enforcement agencies, and regulatory bodies.
• Intangible Assets: Non-physical assets like patents, copyrights, and trademarks that can be used to launder money when transferred or sold.
• Interbank Information Network (IIN): A global network that allows banks to share information about suspicious transactions and individuals to enhance AML efforts.
• Intermediary: An individual or entity that facilitates financial transactions between parties, sometimes used in money laundering to obscure the source or destination of funds.
• Interpol (International Criminal Police Organization): An international organization that assists law enforcement agencies worldwide in combating transnational crime, including money laundering.
• Insider Threat: The risk of money laundering or other financial crimes occurring within a financial institution due to the actions or knowledge of employees or insiders.
• Insider Trading: The illegal buying or selling of securities based on non-public information, which can involve money laundering to conceal profits.
• Institutional Risk Assessment: An assessment of the AML risks specific to a financial institution, including its business model, customer base, and geographic locations.
• Integration: The final stage of money laundering, where illicit funds are reintroduced into the legitimate economy to make them appear clean.
• Internal Controls: Policies, procedures, and mechanisms established within a financial institution to ensure compliance with AML regulations and prevent money laundering.
• Internal Reporting System: A mechanism within a financial institution for employees to report suspicious activities or transactions internally, which is vital for AML compliance.
• Internal Suspicious Activity Report (SAR): A report filed internally by a financial institution when its employees identify suspicious transactions or activities that may involve money laundering.
• Innovative Payment Methods: New and emerging payment technologies and methods, such as mobile payments and cryptocurrencies, which require adaptation of AML strategies.
• Invisible Money Laundering: A method of concealing money laundering activities through complex financial transactions or the use of multiple intermediaries.
• Investigation: The process of examining and gathering evidence related to potential money laundering or other financial crimes, often conducted by AML professionals or law enforcement.

J

• Joint Account: An account held by multiple individuals or entities, which can pose AML challenges in determining beneficial ownership.
• Joint Investigation: A collaborative effort between multiple law enforcement agencies or authorities to investigate money laundering or financial crimes.
• Joint Money Laundering Intelligence Taskforce (JMLIT): A partnership between law enforcement agencies and the financial sector in the United Kingdom aimed at combatting money laundering.
• Joint Proceeds: Illicit funds derived from the collaboration of multiple criminal organizations, often requiring sophisticated AML efforts to trace.
• Joint SAR (Suspicious Activity Report): A report filed jointly by multiple financial institutions when they collectively identify suspicious transactions or activities that may involve money laundering.
• Joint Ventures: Business partnerships formed by multiple entities, which can introduce AML risks when managing financial transactions and relationships.
• Judgment Lien: A legal claim placed on a debtor’s property or assets to secure the repayment of a debt, which can complicate AML efforts when conducting asset tracing.
• Judicial Assistance: Legal cooperation between courts in different jurisdictions to obtain evidence, enforce judgments, or provide assistance in AML cases with an international dimension.
• Judicial Forfeiture: The legal process through which assets or property related to money laundering or other criminal activities are seized and forfeited by the government through a court order.
• Junk Bonds: High-risk, high-yield bonds that may be used for money laundering purposes due to their potential for anonymity and liquidity.
• Jurisdiction Risk: The level of AML risk associated with a particular jurisdiction or geographic location, influenced by factors like regulatory effectiveness, corruption, and crime rates.
• Jurisdictional Banking License: A license granted by a specific jurisdiction’s regulatory authority that permits a bank to operate within that jurisdiction and is subject to AML regulations.
• Jurisdictional Regulatory Authority: The government agency or authority responsible for overseeing and enforcing AML regulations within a specific jurisdiction.
• Jurisdictional Risk Assessment: An evaluation of the AML risk associated with conducting financial transactions or business activities in a particular jurisdiction.
• Jurisdictional Supremacy: A legal principle that establishes the authority of one jurisdiction’s AML laws over another when conflicting laws are involved.
• Jurisdictions of Concern: Countries or regions that pose higher AML risk due to weak AML regulations, political instability, or a history of financial crime.
• Jurisprudence: The legal interpretation and application of AML laws and regulations, often evolving through court decisions and precedent-setting cases.
• Jurisprudential Regime: The legal framework governing AML regulations and enforcement within a specific jurisdiction.
• Juror Misconduct: Improper behavior or actions by a juror during a trial, which can lead to legal challenges in money laundering cases.
• Jury Nullification: A legal concept where a jury acquits a defendant despite evidence of guilt, which may have implications for money laundering cases.

K

• Kafala System: A sponsorship system used in some countries for foreign workers, which can be exploited for money laundering and human trafficking.
• Key Man Risk: The risk associated with a financial institution’s reliance on a single individual or key personnel for AML compliance and decision-making.
• Key Person Insurance (KPI): Insurance coverage taken by a business to protect against financial losses resulting from the death or incapacity of key individuals responsible for AML compliance.
• Key Risk Indicator (KRI): Quantitative or qualitative metrics used to measure and monitor specific AML risks within a financial institution’s operations.
• Keystroke Logging: The monitoring and recording of keyboard inputs on a computer, sometimes used in cybercrimes associated with money laundering.
• Key Transaction Indicators (KTIs): Metrics and data points used to monitor and assess the risk associated with specific financial transactions for potential money laundering.
• Kickbacks: Illicit payments or compensation provided to individuals or entities in exchange for facilitating money laundering activities or other financial crimes.
• Kilogram Method: A method of estimating the value of money laundering activities by calculating the number of kilograms of a specific illicit substance (e.g., drugs) that would need to be sold to generate the laundered funds.
• Kiosk Banking: A banking service model that uses self-service kiosks or automated machines to conduct basic financial transactions, which can be subject to AML regulations.
• Kiting: A fraudulent scheme in which funds are moved between accounts to artificially inflate balances, often used to hide money laundering activities.
• Kleptocracy: A form of government characterized by corruption, embezzlement, and the misuse of public funds, which can involve money laundering to conceal stolen assets.
• Kleptocracy Asset Recovery: The legal and investigative process of identifying, freezing, and repatriating assets stolen by corrupt officials or kleptocrats, often involving international cooperation.
• Know Your Business (KYB): Similar to KYC but focused on understanding the background and activities of corporate entities and businesses to assess AML risk.
• Know Your Client’s Client (KYCC): An extension of the KYC process where financial institutions assess the clients and customers of their clients, particularly relevant in correspondent banking.
• Know Your Correspondent Bank (KYCB): A set of due diligence procedures used by banks to assess the AML risk associated with their correspondent banking relationships.
• Know Your Customer (KYC): A regulatory requirement for financial institutions to verify and understand the identity and background of their customers to prevent money laundering and fraud.
• Know Your Employee (KYE): Internal processes and procedures used by financial institutions to screen and monitor their employees for potential AML risks and conflicts of interest.
• Know Your Regulator (KYR): The process of financial institutions understanding the regulatory authorities that oversee and enforce AML regulations in their jurisdiction.
• Know Your Source (KYS): A due diligence process that requires individuals or entities to verify the source of their wealth or funds to ensure they are not derived from illegal activities.
• Know Your Technology (KYT): The process of evaluating and monitoring the technological tools and systems used within a financial institution for AML compliance.
• Know Your Transaction (KYT): An AML process that involves real-time monitoring of financial transactions to identify suspicious activity promptly.
• Know Your Vendor (KYV): The process of assessing the AML risk associated with suppliers, vendors, or other third-party entities with which a business engages.
• Knowledge-Based Authentication (KBA): An identity verification method that relies on asking individuals specific questions about their personal history or background to confirm their identity, often used in online AML processes.
• Knowledgeable Employee: An employee within a financial institution who possesses specialized knowledge about AML compliance and plays a crucial role in identifying and reporting suspicious activities.
• Knowledge-Driven AML: An AML approach that leverages advanced data analytics, machine learning, and artificial intelligence to detect and prevent money laundering based on patterns and insights.
• KyciChain: A blockchain-based platform designed to enhance KYC and AML processes through the secure sharing of customer information among financial institutions.
• KYC Remediation: The process of updating and re-verifying customer information to ensure compliance with changing AML regulations and to rectify any deficiencies in the KYC process.

L

• Large Cash Transaction Report (LCTR): A report filed by financial institutions to regulatory authorities when large cash transactions exceeding a certain threshold occur.
• Large Exposure: In banking, a large exposure is a significant financial relationship with a customer or entity, which may require enhanced due diligence to mitigate AML risks.
• Late-Stage Money Laundering: The final phase of money laundering, where laundered funds are integrated into the legitimate economy to appear as though they have a lawful origin.
• Latent Defect: A concealed defect in a product, property, or financial instrument, which can have AML implications when used to legitimize illegal funds.
• Laundering Risk Assessment: An evaluation of the money laundering risks associated with specific transactions, customers, or business relationships.
• Laundering the Proceeds of Tax Evasion: The process of disguising funds obtained from tax evasion as legitimate income, often a focus of AML efforts.
• Law Enforcement Agency (LEA): Government agencies responsible for investigating and combating financial crimes, including money laundering.
• Law Enforcement Sensitive (LES): Information, documents, or data that is designated as sensitive and not intended for public disclosure, often relevant in AML investigations.
• Law of Large Numbers: A statistical principle that suggests that larger datasets are more reliable for detecting unusual patterns or anomalies, which is relevant in AML data analysis.
• Layered Risk Assessment: A multi-tiered approach to evaluating AML risks, considering various factors such as customer profiles, transactions, and geographic locations.
• Layered Transactions: A money laundering technique where multiple transactions are conducted to create confusion and hide the true source of funds.
• Layering: A stage in the money laundering process where illicit funds are intentionally moved through a complex series of transactions to obscure their origin and make them appear legitimate.
• Leakage: The unauthorized or unintentional disclosure of sensitive information, which can pose AML risks related to data breaches.
• Legal Entity Identifier (LEI): A unique code used to identify legal entities participating in financial transactions, helping to improve transparency and AML efforts.
• Legal Entity Identifier (LEI): A unique code used to identify legal entities participating in financial transactions, helping to improve transparency and AML efforts.
• Legal Entity Identifier Regulatory Oversight Committee (LEIROC): An organization responsible for overseeing the Global Legal Entity Identifier System (GLEIS), which can impact AML compliance.
• Legal Form of Organization: The specific structure and legal nature of a business entity, impacting how AML regulations apply.
• Legal Instrument: A legal document, such as a contract or agreement, which may be used in money laundering activities to legitimize transactions.
• Legal Jurisdiction: The geographical area or legal system in which financial transactions and entities operate, influencing the application of AML regulations.
• Legal Practitioner Privilege: A legal concept that protects communications between lawyers and their clients from being disclosed in certain circumstances, sometimes used to conceal money laundering activities.
• Licensed Money Services Business (MSB): Entities authorized by regulatory authorities to provide financial services like money transfer, currency exchange, or check cashing, subject to AML regulations.
• Limited Liability Company (LLC): A business structure that offers personal liability protection to its owners, which can be used in money laundering schemes to conceal ownership.
• Limited Partnership (LP): A business structure in which some partners have limited liability, potentially used in money laundering schemes to shield assets.
• Linked Transactions: AML investigations often involve identifying connections between multiple transactions or entities to uncover complex money laundering schemes.
• Liquidity Management: A financial institution’s practices for managing its liquidity to meet customer demands while complying with AML and regulatory requirements.
• Liquidity Risk: The risk that a financial institution may not have enough liquid assets to meet its financial obligations, which can impact AML compliance efforts.
• Liquid Assets Requirement: A regulatory requirement for financial institutions to maintain a certain level of liquid assets to ensure solvency and compliance with AML obligations.
• Liquidation: The process of converting assets, such as investments or properties, into cash, which can be a stage in money laundering when illicit assets are sold.
• Loan Sharking: An illegal practice where loans are provided at exorbitant interest rates, which can be associated with money laundering when loan proceeds are integrated into the financial system.
• Local Risk Assessment: An evaluation of AML risks specific to a particular geographic area or branch of a financial institution.
• Look-Back Period: A defined period of time during which financial institutions review past transactions to identify and report suspicious activities or regulatory violations, often used in AML investigations.
• Loss Leader: A product or service sold at a loss to attract customers, which can be used in money laundering schemes to legitimize funds.
• Loss Mitigation: A strategy employed by financial institutions to minimize financial losses from money laundering or fraud through preventive measures and risk management.
• Loss Recovery: The process of attempting to recover assets or funds lost due to money laundering or other financial crimes through legal and investigative means.
• Luxury Goods: High-end, expensive products like jewelry, art, and collectibles that can be used for money laundering due to their high value and portability.

M

• Managed Trust Company: A financial institution that provides trustee services, subject to AML regulations and oversight.
• Market Abuse: Unfair and fraudulent practices in financial markets, including insider trading and market manipulation, which can have AML implications.
• Market Intelligence: The collection and analysis of information about financial markets and industries, used to detect trends and potential money laundering activities.
• Market Manipulation: The illegal practice of artificially inflating or deflating the price of securities or assets to profit from subsequent transactions, which may involve money laundering.
• Market Risk: The risk of financial losses resulting from fluctuations in market conditions, which can impact AML strategies and risk assessments.
• Market Risk Committee: A committee within a financial institution responsible for assessing and managing market risk, including risks related to money laundering.
• Market Surveillance: The monitoring and analysis of financial markets to detect irregular or suspicious trading activity that may be indicative of money laundering.
• Market Surveillance Software: Technology and tools used by financial institutions to monitor trading activity for signs of market manipulation and money laundering.
• Marketplace Lending: A type of lending where individuals or entities can lend money to borrowers through online platforms, which may require AML due diligence.
• MasterCard SecureCode: A security feature for online credit card transactions, subject to AML monitoring and authentication requirements.
• Material Nonpublic Information (MNPI): Insider information that has not been disclosed to the public, often associated with insider trading and money laundering.
• Material Support: Providing financial or logistical assistance to individuals or entities engaged in illegal activities, which is a focus of AML efforts.
• Materiality Threshold: The threshold at which a financial institution considers a transaction or event significant enough to warrant further investigation for potential money laundering.
• Merchant Acquirer: A financial institution that facilitates card-based payment transactions for merchants, which may require AML due diligence.
• Merchant Category Code (MCC): A four-digit code used to classify businesses and merchants by industry type for transaction monitoring and AML purposes.
• Microfinance Institutions (MFIs): Organizations that provide financial services to low-income individuals and businesses, subject to AML regulations.
• Microtransactions: Small financial transactions, often conducted online, that can be used in money laundering when aggregated into larger sums.
• Mismatch Risk: The risk associated with discrepancies or inconsistencies in information provided by customers, which can be exploited in money laundering schemes.
• Mobile Money: A digital payment system that allows users to store and transfer money using mobile devices, which can be subject to AML regulations.
• Mobile Wallet: A digital wallet stored on a mobile device that allows users to make payments and conduct financial transactions, subject to AML scrutiny.
• Model Validation: The process of assessing and verifying the effectiveness and accuracy of AML detection models and algorithms used by financial institutions.
• Monetary Authority: A regulatory body or government agency responsible for overseeing and enforcing financial regulations, including AML rules and compliance.
• Monetary Threshold: A specific amount or value set by regulatory authorities, above which financial institutions are required to report transactions as part of AML compliance.
• Money Laundering Control Act (MLCA): A U.S. federal law that criminalizes money laundering and imposes penalties for violations, including fines and imprisonment.
• Money Laundering Officer (MLO): A designated individual within a financial institution responsible for overseeing and implementing the institution’s AML program.
• Money Laundering Reporting Officer (MLRO): A designated individual within a financial institution responsible for receiving and reporting suspicious activity reports (SARs) as part of AML compliance.
• Money Laundering Suppression Act (MLSA): Legislation aimed at combating money laundering and other financial crimes, enacted in various countries to strengthen AML regulations.
• Money Mule Recruitment: The process by which criminals recruit individuals to act as mules in money laundering schemes.
• Money Services Business (MSB): Entities engaged in providing financial services like money transfer, currency exchange, or check cashing, which are subject to AML regulations.
• Mutual Legal Assistance Treaty (MLAT): International agreements that allow countries to request and provide legal assistance in criminal investigations, including money laundering cases.
• Mule: An individual who is used to transfer illicit funds or goods on behalf of a criminal organization, often unknowingly, which is a common money laundering tactic.
• Mule Account: A bank or financial account used by money mules to facilitate the transfer of illicit funds, often without the mule’s knowledge of the criminal activity.
• Mule Recruitment: The process by which criminals identify, recruit, and employ individuals (money mules) to move and launder illicit funds.
• Mule Network: A network of money mules and intermediaries involved in the movement of illicit funds through various transactions, which can complicate AML investigations.
• Multinational Corporation (MNC): A company that operates in multiple countries, often subject to complex AML compliance requirements due to its global presence.

N

• National Security Threat: A risk assessment category that considers potential threats to a country’s national security posed by money laundering and terrorist financing activities.
• National Supervisory Authority: A government agency or regulatory authority responsible for overseeing and regulating financial institutions and enforcing AML laws within a specific country.
• Negative Confirmation: A method used in AML compliance where customers are asked to confirm that they are not involved in illicit activities or on sanctions lists.
• Negative Consent: A consent method used in AML compliance where customers are informed that their accounts will be subject to specific actions or changes unless they explicitly object.
• Negative News Screening: The process of monitoring news sources and databases for negative information about individuals or entities to assess AML risk and compliance.
• New Account Onboarding: The process of accepting and verifying new customers, which includes KYC and AML checks to ensure compliance.
• No-Action Letter: A letter issued by regulatory authorities stating that they will not take enforcement action against an individual or entity under certain conditions, which can be relevant in AML compliance discussions.
• Non-Bank Deposit Taker (NBDT): Financial institutions that take deposits but are not traditional banks, subject to AML regulations and supervision.
• Non-Bank Financial Institution (NBFI): Entities that provide financial services but are not traditional banks, subject to AML regulations.
• Non-Compliant Customer: A customer who does not meet the AML compliance requirements set by a financial institution, often requiring enhanced monitoring or account closure.
• Non-Compliance Penalty: Fines or penalties imposed on financial institutions for failing to adhere to AML regulations and requirements.
• Non-Cooperative Country or Territory (NCCT): A jurisdiction that does not cooperate with international efforts to combat money laundering and is considered high risk in AML assessments.
• Non-Cooperative Jurisdiction: A jurisdiction or country that does not fully cooperate with international efforts to combat money laundering and financial crimes, often considered high risk.
• Non-Disclosure Agreement (NDA): A legal contract that imposes confidentiality obligations and may be used in AML investigations to protect sensitive information.
• Non-Executive Director (NED): A director of a company who is not involved in the day-to-day operations, which can impact AML oversight and governance.
• Non-Government Report (NGR): A report filed by entities other than government agencies to report suspicious activities or transactions, contributing to AML efforts.
• Non-Governmental Organization (NGO): Charitable or nonprofit organizations that may be used for money laundering or terrorist financing, making them subjects of AML scrutiny.
• Non-Monetary Assets: Assets that do not have a fixed monetary value, such as real estate, which can be used in money laundering when bought with illicit funds.
• Non-Operating Holding Company (NOHC): A corporate entity that primarily holds investments in other companies but does not engage in day-to-day business operations, which can have AML implications.
• Non-Profit Organization (NPO): Charitable or nonprofit organizations that may be vulnerable to abuse for money laundering and terrorist financing purposes, subject to AML regulations.
• Non-Resident Account: A bank or financial account held by an individual or entity who is not a resident of the country where the account is located, often subject to enhanced AML due diligence.
• Non-Resident Alien (NRA): An individual who is not a resident or citizen of the country in which they are conducting financial transactions, which can raise AML concerns.
• Nostro and Vostro Accounts: Nostro accounts are accounts held by a bank in a foreign currency in another bank, while vostro accounts are accounts held by another bank in the local currency of the bank maintaining the account. These accounts can be used for cross-border transactions and may pose AML risks.
• Nostro/Vostro Reconciliation: The process of reconciling accounts between two banks, often in different countries, to ensure accurate and transparent cross-border transactions, which is crucial for AML compliance.
• Notification Threshold: The point at which a financial institution is required to notify regulatory authorities about certain AML-related events or activities, such as large transactions or suspicious activities.

O

• Office of Foreign Assets Control (OFAC): A division of the U.S. Department of the Treasury responsible for enforcing economic and trade sanctions programs, important in AML compliance to screen against sanctions lists.
• Office of Inspector General (OIG): An independent office within a government agency responsible for investigating fraud, waste, and abuse, including AML violations.
• Office of the Comptroller of the Currency (OCC): A U.S. federal agency that supervises and regulates national banks and federal savings associations, including overseeing their AML compliance.
• Occasional Customer: A customer who conducts infrequent transactions with a financial institution, often subject to the same AML scrutiny as regular customers.
• Offshore Banking: Banking services provided by banks located in jurisdictions with favorable tax and regulatory conditions, which can be used for money laundering if not properly regulated.
• Offshore Financial Center: A jurisdiction that offers favorable tax and regulatory conditions, often used for offshore banking and potentially money laundering.
• Obligations of Secrecy: Legal obligations that prevent certain professionals, such as lawyers and accountants, from disclosing information about their clients, which can be relevant in AML investigations.
• Open Banking: A financial services trend that allows third-party providers access to consumer financial data, requiring robust AML controls to protect against unauthorized access and fraud.
• Open Source Intelligence (OSINT): The collection and analysis of publicly available information from sources such as social media, news, and the internet, which can be used in AML investigations.
• Operational Control: The level of authority and oversight a person or entity has over operational functions, important in determining responsibility for AML compliance.
• Operational Due Diligence (ODD): A process used by investors to assess the operational risks of hedge funds and private equity firms, which includes evaluating AML controls.
• Operational Efficiency: The ability of financial institutions to effectively manage AML processes and procedures to prevent money laundering while minimizing operational costs.
• Operational Risk: The risk of financial losses resulting from inadequate or failed internal processes, systems, or human error, which can impact AML compliance.
• Organized Crime: Criminal organizations engaged in systematic and coordinated illegal activities, often involving money laundering to legitimize their proceeds.
• Original Identification Documents: Official documents used to verify the identity of customers during the KYC (Know Your Customer) process, such as passports and driver’s licenses.
• Out-of-Cycle Review: An unscheduled review or assessment of an organization’s AML program, often conducted in response to regulatory concerns or specific incidents.
• Out-of-Pattern Transaction: A transaction that deviates significantly from a customer’s typical transaction behavior, which can raise suspicion and warrant further AML investigation.
• Outlier Analysis: A data analysis technique used in AML to identify unusual or suspicious patterns or transactions that may indicate money laundering.
• Outlier Detection: The identification of data points or transactions that significantly deviate from the expected or normal pattern, an essential part of AML monitoring and detection.
• Outsourced Compliance: The practice of hiring external firms or consultants to manage AML compliance functions on behalf of a financial institution.
• Outsourcing Risk: The risk associated with contracting third-party service providers for AML functions, including customer due diligence and transaction monitoring.
• Outward Remittance: A transfer of funds from a domestic bank to a foreign bank, which can be subject to AML scrutiny to prevent illicit capital outflows.
• Over-The-Counter (OTC) Market: A decentralized market for trading financial instruments, including cryptocurrencies, which may require AML controls to prevent illicit activities.
• Overdraft Protection: A financial service that covers transactions when an account has insufficient funds, which can be abused for money laundering.
• Overseas Subsidiary: A foreign-based subsidiary of a company, which can be used for money laundering or pose AML risks if not properly monitored.
• Overseas Territories: Geographic regions or territories that are governed by another country and may have different AML regulations, posing jurisdictional risks.
• Ownership Verification: The process of confirming the legal ownership of assets, accounts, or entities, crucial in AML investigations to identify beneficial ownership.

P

• Parallel Banking: An illegal banking system operating alongside the formal financial sector, often used for money laundering purposes.
• Patriot Act: The USA PATRIOT Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001) is a U.S. law that expanded and enhanced AML regulations and introduced measures to combat terrorism financing.
• Payment Facilitator: A business that facilitates payments on behalf of others, which can be subject to AML regulations and compliance requirements.
• Payment Service Provider (PSP): Entities that offer payment processing services, including online payments, subject to AML regulations.
• Penalty for Non-Compliance: Fines and penalties imposed on financial institutions for failing to adhere to AML regulations and requirements.
• Personal Identification Number (PIN): A numeric code used to access financial accounts through ATMs or other electronic means, subject to AML protections.
• Peer-to-Peer (P2P) Payment: A method of transferring funds directly between individuals without the involvement of traditional financial institutions, which can pose AML risks.
• Person of Interest (POI): An individual or entity that is under scrutiny by law enforcement or investigative authorities in relation to possible money laundering or criminal activities.
• Perpetrator: The individual or entity responsible for committing money laundering or other financial crimes.
• Piggybacking: A money laundering technique where illicit funds are moved through legitimate transactions or investments, making them appear lawful.
• Physical Surveillance: The observation and monitoring of individuals or entities suspected of being involved in money laundering or criminal activities.
• Placement: The first stage of money laundering where illicit funds are introduced into the financial system, often through small transactions to avoid detection.
• Placement Risk: The risk associated with the initial stage of money laundering, where illicit funds are first introduced into the financial system.
• Policy and Procedures Manual: A document that outlines an organization’s AML policies, procedures, and compliance protocols.
• Politically Exposed Entity (PEE): Organizations that are owned or controlled by politically exposed persons, which can also pose AML risks.
• Politically Exposed Family Member (PEFM): Relatives of politically exposed persons who may also pose AML risks due to their potential involvement in illicit activities.
• Politically Exposed Person (PEP): An individual who holds or has held a prominent public position, making them susceptible to corruption or involvement in money laundering, requiring enhanced due diligence.
• Ponzi Scheme: A fraudulent investment scheme where returns are paid to earlier investors from funds contributed by newer investors, often leading to money laundering when funds are integrated into the financial system.
• Portfolio Risk: The risk associated with an investment portfolio, which can be influenced by AML concerns when dealing with high-risk assets or clients.
• Positive Confirmation: A consent method used in AML compliance where customers are explicitly asked to confirm their understanding and agreement with specific terms and conditions.
• Post-Transaction Monitoring: The ongoing monitoring of customer accounts and transactions for unusual or suspicious activities after the initial onboarding process.
• Prejudice to Confidence (Prejudicing Confidence): A legal concept referring to actions or behaviors that could undermine public trust and confidence in the financial system, often relevant in AML investigations.
• Prepaid Access: A system that provides prepaid cards, electronic wallets, and other similar products, which are subject to AML regulations.
• Prepaid Card: A reloadable payment card that can be used for transactions, sometimes used in money laundering for anonymity.
• Predicate Offense: The underlying criminal activity that generates illicit funds subject to money laundering, such as drug trafficking or fraud.
• Primary Regulator: The regulatory authority primarily responsible for overseeing and enforcing AML regulations for a specific financial institution.
• Principles-Based Approach: An AML regulatory approach that sets high-level principles and guidelines, allowing financial institutions flexibility in implementing specific measures to meet these principles.
• Private Banking: Banking services tailored for high-net-worth individuals, which can be susceptible to money laundering risks.
• Professional Conduct: Ethical standards and codes of conduct that individuals and organizations in the financial sector must adhere to, which includes AML compliance.
• Proxy Account: An account held by one person or entity on behalf of another, which can be used for money laundering to conceal the true owner.
• Profits of Criminal Conduct: Funds generated from illegal activities, such as drug trafficking, which are targeted in AML efforts.
• Prompt Investigation: The requirement for financial institutions to promptly investigate and report suspicious activities or transactions as part of their AML obligations.
• Prohibited Business Activities: Specific business activities that may be subject to AML restrictions or prohibitions, such as dealing with high-risk industries or countries.
• Pyramiding: A money laundering technique involving layering and structuring transactions to make it difficult to trace the origin of funds.

R

• Reciprocal Due Diligence: The practice of one financial institution relying on due diligence conducted by another institution when dealing with shared customers, which can impact AML assessments.
• Record Keeping: The practice of retaining and maintaining detailed records of customer information, transactions, and AML compliance efforts, as required by regulations.
• Red Flags: Warning signs or indicators that suggest possible money laundering or suspicious activities, prompting further investigation by financial institutions.
• Registration Requirements: Mandated processes that financial institutions must follow to register with regulatory authorities and comply with AML regulations.
• RegTech (Regulatory Technology): Technological solutions and tools designed to help financial institutions automate and streamline compliance with AML and other regulatory requirements.
• Regulatory Authority: Government agencies or bodies responsible for creating, enforcing, and overseeing AML regulations and compliance in financial sectors.
• Regulatory Compliance: The adherence to and fulfillment of AML laws, rules, and regulations by financial institutions and other relevant entities.
• Regulatory Examination: An assessment conducted by regulatory authorities to evaluate a financial institution’s compliance with AML regulations and other relevant laws.
• Regulatory Sandbox: A controlled environment where businesses can test innovative AML and financial technologies under regulatory supervision.
• Remittance Service Provider: Businesses that offer money transfer and remittance services, often subject to AML regulations to prevent money laundering.
• Remote Account Opening: The practice of opening bank accounts or financial services online or without a physical presence, which requires robust AML verification processes.
• Reportable Transaction: A transaction that meets specific criteria requiring financial institutions to file a suspicious activity report (SAR) or other regulatory reports with authorities.
• Reporting Entity: Financial institutions and other entities obligated to report suspicious activities or transactions to regulatory authorities as part of AML compliance.
• Repatriation of Funds: The process of bringing back funds or assets to their home country, which can be a focus of AML efforts to detect illegal transfers.
• Residual Risk: The level of risk that remains after implementing risk mitigation measures, which financial institutions must monitor as part of ongoing AML efforts.
• Responsible Officer: An individual within a financial institution responsible for overseeing and ensuring AML compliance and reporting.
• Retail Banking: Banking services offered to individual consumers, which may be vulnerable to money laundering risks through activities like account opening and transactions.
• Retail Payment System: A system that facilitates electronic payments by consumers, subject to AML controls to prevent illicit transactions.
• Retroactive Reporting: Reporting of suspicious activities or transactions after they have occurred but were not initially recognized as suspicious, which is sometimes required by AML regulations.
• Risk Appetite: The level of risk that an organization is willing to tolerate in its pursuit of business goals, which affects AML strategies and decision-making.
• Risk Assessment: The process of evaluating and quantifying AML risks associated with customers, transactions, and geographic locations to inform compliance measures.
• Risk-Based Approach: A risk management strategy in AML that involves allocating resources and applying due diligence measures proportionally based on the assessed level of risk associated with customers, transactions, or products.
• Risk Culture: The organizational values, attitudes, and behaviors related to risk management and AML compliance within a financial institution.
• Risk Mitigation: Strategies and measures implemented by financial institutions to reduce or manage AML risks and vulnerabilities.
• Risk Ranking: The process of categorizing customers, transactions, or entities based on their assessed level of AML risk, often used in the risk-based approach.
• Risk Rating: Assigning a risk score or category to customers, transactions, or products based on their potential AML risk, used in the risk-based approach.
• Rogue Trader: An employee or individual within a financial institution who engages in unauthorized trading activities, potentially leading to money laundering concerns.
• Round-Tripping: A money laundering technique where funds are sent offshore and then returned, creating the appearance of legitimate transactions.

S

• Safe Harbor: Legal protections or immunities granted to institutions or individuals under certain circumstances when they report suspicious activities in good faith, encouraging AML reporting.
• Sanctions: Penalties or restrictions imposed by governments or international bodies on individuals, entities, or countries to enforce compliance with international law or AML regulations.
• Sanctions Screening: The process of screening individuals and entities against government sanctions lists to ensure compliance with AML regulations.
• SAR (Suspicious Activity Report): A report filed by financial institutions to alert regulatory authorities to suspicious or potentially illegal activities, a key component of AML compliance.
• Screening Software: Software tools and solutions used by financial institutions to automate the screening process for AML compliance, including sanctions and PEP screening.
• Secrecy Act: The Bank Secrecy Act (BSA) in the United States is a key AML law that requires financial institutions to establish and maintain AML programs, report certain transactions, and cooperate with law enforcement.
• Secrecy Jurisdiction: A jurisdiction known for bank secrecy laws that protect the identities of account holders, often associated with money laundering risks.
• Securities and Exchange Commission (SEC): A U.S. regulatory agency responsible for enforcing federal securities laws, including AML compliance in the securities industry.
• Self-Assessment: The process by which financial institutions evaluate their own AML controls, policies, and procedures to identify and address vulnerabilities.
• Shadow Banking: Financial activities conducted by non-bank entities that may be subject to AML regulations to prevent money laundering outside the traditional banking sector.
• Sovereign Risk: The risk associated with doing business in or with foreign governments or entities, which can have AML implications due to political instability.
• Source of Funds: The origin or provenance of funds used in financial transactions, which is a critical aspect of AML due diligence.
• Source of Funds (SOF) Verification: The process of verifying the legitimacy of the funds used in a financial transaction, crucial for AML due diligence.
• Source of Wealth: The legitimate origin of an individual’s wealth or assets, which is essential in AML investigations to identify beneficial ownership.
• Straw Man: An individual who is used to hide the true identity of a beneficial owner, often employed in money laundering schemes.
• Stakeholder: Individuals or groups with an interest or stake in a financial institution’s operations, including regulators, customers, and shareholders.
• Strategic Compliance Plan: A plan developed by financial institutions to outline their approach to achieving AML compliance and managing risks strategically.
• Strategic Risk: The risk associated with an organization’s strategic decisions and goals, including those related to AML compliance.
• Structured Products: Financial products designed to provide customized risk and return profiles, which can be used in money laundering when not properly monitored.
• Structured Transactions: Deliberately breaking down larger transactions into smaller ones to avoid detection thresholds and reporting requirements, a common money laundering tactic.
• Subpoena: A legal order requiring an individual or entity to provide information or appear in court, often used in AML investigations.
• Supervisory Authority: A government agency or regulatory body responsible for overseeing and regulating financial institutions to ensure AML compliance.
• Supply Chain Risk: The risk associated with the use of suppliers, vendors, or intermediaries that may be involved in money laundering or financial crimes.
• Suspension of Transactions: A temporary halt or freeze on specific transactions or accounts when money laundering or other suspicious activities are suspected.
• Suspicious Patterns of Behavior: Repetitive or unusual customer behavior that may indicate money laundering and warrants further investigation.
• Suspicious Transaction Monitoring: The ongoing process of reviewing customer transactions to detect and investigate potentially suspicious activities.
• Suspicious Transaction Report (STR): A report filed by financial institutions to report suspicious or unusual transactions to regulatory authorities, a key component of AML compliance.
• Swift Code: A unique code used in international financial transactions to identify specific banks and financial institutions, important in AML for tracking cross-border funds.
• Systemically Important Financial Institution (SIFI): A financial institution whose failure could pose significant risks to the broader financial system, which may require enhanced AML scrutiny.
• Systemic Risk: The risk of a widespread collapse in the financial system, which can be exacerbated by money laundering and financial crimes.

T

• Tax Evasion: The illegal act of deliberately underreporting or concealing income or assets to avoid paying taxes, which can be linked to money laundering.
• Tax Haven: A jurisdiction with favorable tax laws and regulations that may be exploited for tax evasion and money laundering purposes.
• Tax Identification Number (TIN): A unique number assigned to individuals and businesses for tax purposes, often used in AML for customer identification.
• Terrorism Financing: The act of providing funds or financial support to terrorist organizations or individuals involved in terrorist activities, which is a major focus of AML efforts.
• Tipping Off: The illegal act of informing or warning a customer or third party about an impending AML investigation, which is prohibited in many jurisdictions.
• Third-Party Risk: The risk associated with conducting business with third-party entities, including suppliers, intermediaries, or service providers, which can pose AML risks.
• Threshold Analysis: The examination of financial transactions to identify those that meet or exceed predetermined thresholds, triggering enhanced AML scrutiny.
• Threshold Risk: The risk associated with specific financial transactions, including their size, nature, or complexity, which can affect AML compliance measures.
• Token Economy: A system where digital tokens are used as a medium of exchange, which can introduce AML challenges, especially in cryptocurrencies.
• Tokenization: The process of converting sensitive information, such as credit card numbers, into non-sensitive tokens for secure storage and transmission, relevant for AML data protection.
• Transaction Alert: A notification generated by AML monitoring systems to flag potentially suspicious transactions for further investigation.
• Transaction Laundering: A method of money laundering where illicit funds are disguised as legitimate transactions within a larger network of financial activities.
• Transaction Monitoring: The process of continuously reviewing and analyzing customer transactions for unusual or suspicious activities, a core component of AML compliance.
• Transaction Monitoring System: Software or technology used by financial institutions to automatically monitor customer transactions for signs of money laundering or suspicious activities.
• Transaction Profile: A summary of a customer’s typical transaction behavior and activity, used as a reference for identifying unusual or suspicious transactions.
• Transaction Record: Comprehensive documentation of a financial transaction, including details of the parties involved, the transaction date, and the purpose, important for AML record-keeping.
• Transaction Record Identifier: A unique reference number assigned to individual financial transactions, helping in tracking and monitoring for AML purposes.
• Transaction Reporting: The obligation of financial institutions to report certain transactions to regulatory authorities as part of AML compliance, including SARs (Suspicious Activity Reports) and CTRs (Currency Transaction Reports).
• Transaction Reporting: The process of reporting certain financial transactions to regulatory authorities as required by AML regulations, including Suspicious Activity Reports (SARs).
• Transaction Risk: The risk associated with specific financial transactions, including their size, nature, or complexity, which can affect AML compliance measures.
• Transaction Risk Assessment: The process of evaluating the risk associated with specific transactions to determine the level of due diligence required.
• Transaction Structuring: Deliberate manipulation of transaction amounts or frequencies to avoid detection thresholds, a common money laundering tactic.
• Transaction Threshold: A predetermined monetary limit that triggers enhanced due diligence or reporting requirements for specific transactions, set by regulatory authorities.
• Transaction Verification: The process of confirming the legitimacy of a financial transaction through various methods, including documentation and verification of parties involved.
• Transaction Velocity: The speed at which financial transactions occur, which can be used in AML monitoring to identify unusual patterns.
• Trade Finance: Financial services and instruments that facilitate international trade, including letters of credit and trade finance transactions, which are subject to AML scrutiny.
• Trade-Based Financial Crime: Financial crimes involving international trade, which can include trade-based money laundering and fraudulent trade transactions.
• Trade-Based Money Laundering (TBML): A money laundering technique involving the manipulation of international trade transactions to move illicit funds across borders.
• Travel Rule: A regulation requiring financial institutions to include specific information about the originator and beneficiary of wire transfers, aimed at enhancing AML transparency.
• Trust Account: An account established to hold funds or assets on behalf of a beneficiary, which can be used in money laundering schemes.

U

• Ultimate Beneficial Owner (UBO): The individual or entity that ultimately owns or controls a customer or legal entity, especially relevant in AML due diligence to identify and verify the real owners behind complex corporate structures.

V

• Value Transfer System: A system that enables the transfer of value, including cryptocurrencies and digital assets, which can pose AML challenges.
• Value Transfer System Risk: The risk associated with the use of value transfer systems, including their potential for anonymity and money laundering.
• Vendor Due Diligence: The process of assessing and verifying the AML compliance of third-party vendors, suppliers, or service providers used by financial institutions.
• Verification of Identity: The process of confirming the identity of customers or clients, a fundamental aspect of AML compliance during customer onboarding.
• Virtual Asset Service Provider (VASP): Businesses or individuals involved in providing services related to virtual currencies or cryptocurrencies, subject to AML regulations.
• Virtual Currency: Digital or cryptocurrency that operates independently of a central authority and may be used for money laundering, requiring AML regulations.
• Visa Waiver Program (VWP): A U.S. program allowing nationals of certain countries to enter the United States for a limited period without a visa, which has AML implications regarding border controls.
• Voluntary AML Programs: AML compliance programs that are implemented voluntarily by organizations or businesses, often exceeding regulatory requirements.
• Voluntary Disclosure: When a business or individual voluntarily reports known or suspected AML violations to regulatory authorities, often resulting in reduced penalties.
• Vulnerability Assessment: An evaluation of an organization’s susceptibility to AML risks, which helps in designing risk mitigation strategies.

W

• Watchlist: A list of individuals, entities, or organizations of interest to law enforcement or regulatory authorities due to potential AML risks, including sanctions lists and PEP lists.
• Wholesale Banking: Banking services provided to businesses and corporations, which may involve higher transaction volumes and AML risks.
• Whistleblower: An individual who reports wrongdoing or illegal activities within an organization, including AML violations, to authorities or regulators.
• Wire Room: A department within a financial institution responsible for processing and monitoring wire transfers, often critical for AML compliance.
• Wire Room Operator: An individual responsible for managing and overseeing wire transfer operations, with AML compliance responsibilities.
• Wire Stripping: A money laundering technique where the true origin and beneficiary of funds in a wire transfer are concealed, often involving multiple intermediaries.
• Wire Transfer: The electronic transfer of funds from one financial institution to another, which is subject to AML regulations, especially for cross-border transactions.
• Written Procedures: Documented instructions and guidelines outlining AML policies, processes, and controls within a financial institution.

Z

• Zealous Enforcement: Refers to aggressive regulatory and law enforcement actions aimed at combating money laundering. Zealous enforcement might include extensive surveillance, rigorous investigation, and severe penalties for AML violations.
• Zombie Account: An inactive or rarely used account that suddenly shows activity, potentially for the purpose of money laundering. Financial institutions often monitor for zombie account activities as part of their AML efforts.
• Zone of Risk: A term used to describe a geographical or virtual space that has a high propensity for money laundering activities. Enhanced due diligence is often applied to transactions that involve high-risk zones.