Anti-money laundering is a specific field full of industry specific definitions and abbreviations, where a reliable AML glossary is necessary to understand the industry terminology.
If you are a financial crime fighter working in a financial institution, an AML officer responsible for a large compliance team, or simply want to better understand common fraud and anti-money laundering terms, AMLYZE is here to help.
Below is a list of frequently used acronyms and terms, along with their definitions.
As this is a dynamic industry, we’ll be adding new definitions on a regular basis. Feel free to bookmark this page and use it for your daily needs.
Choose the exact letter to find your word:
A B C D E F G H I K L M N O P R S T U V W
A
Adverse Media Screening
A due diligence process used by financial institutions and other entities to identify negative or unfavorable information about a customer from various media sources. This screening involves searching for news articles, reports, and other publications that may reveal involvement in criminal activities, regulatory breaches, or other reputational risks. The purpose is to enhance customer risk assessment by detecting potential red flags early, ensuring compliance with AML/CFT regulations, and mitigating risks associated with associating with individuals or entities that may pose a threat to the organization’s integrity and reputation. Read our blog post about adverse screening here.
AMLA
AMLA is the EU authority to combat money laundering and the financing of terrorism (AMLA). This was part of a legislative package aimed at implementing the 2020 Action Plan for a comprehensive EU policy to prevent money laundering and terrorist financing. The AMLA will be at the center of an integrated system consisting of the Authority itself and national authorities with an AML/CFT supervisory mandate. It will also support EU financial intelligence units (FIUs) and establish a cooperation mechanism between them.
AML Audit
AML audit is a thorough review and evaluation of a financial institution’s anti-money laundering (AML) program. This process assesses the effectiveness and compliance of the institution’s AML policies, procedures, and controls with relevant laws and regulations. The goal of an AML audit is to ensure that the institution is adequately identifying, managing, and mitigating the risk of money laundering and terrorist financing activities. Read more about AML audits here in our blog post.
AML Vendor
An AML/CFT vendor is a company that provides products, services, or software solutions to help financial institutions and other organizations comply with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations. These vendors offer tools for transaction monitoring, customer due diligence, risk assessment, regulatory reporting, and other compliance-related functions to detect, prevent, and manage financial crimes. AMLYZE is one of the examples here.
AML Compliance
The adherence of financial institutions and related entities to Anti-Money Laundering (AML) laws and regulations. AML compliance involves implementing policies, procedures, and controls to detect, prevent, and report activities associated with money laundering, terrorist financing, and other financial crimes. It includes conducting customer due diligence, monitoring transactions for suspicious activity, training staff, and maintaining records as mandated by regulatory authorities. AML compliance aims to protect institutions from legal and reputational risks while contributing to global efforts to combat financial crime effectively. Read here our blog post dedicated to AML compliance.
AML Fine
A monetary penalty imposed on financial institutions or related entities for failing to comply with Anti-Money Laundering (AML) regulations. These fines are levied by regulatory authorities to enforce compliance and deter violations of AML laws, which may include inadequate customer due diligence, failure to report suspicious activities, or insufficient internal controls and monitoring systems. AML fines serve as a significant deterrent against non-compliance, emphasizing the importance of robust AML practices to prevent money laundering and terrorist financing activities. Read here our blog post dedicated to AML/CFT fines.
AML Investigation
AML investigation, sometimes referred to as AML case management, is the systematic analysis of unusual activity to determine whether it indicates that a customer may be involved in money laundering, terrorist financing or other criminal activity. The process involves identifying suspicious transactions or activity, evaluating the activity identified by analyzing transaction patterns and customer profiles, and recording all findings and evidence to provide a comprehensive record of the investigation. If the investigation concludes that the activity is suspicious, the institution submits Suspicious Activity Reports (SARs)/Suspicious Transaction Reports (STRs) or other required reports to regulatory authorities. Follow-up actions may include freezing accounts, increasing due diligence, or terminating business relationships, and coordinating with law enforcement agencies as appropriate. Based on the results of investigations, AML procedures and controls are periodically reviewed and updated to improve the effectiveness of the institution’s AML program. The goal is to prevent the financial system from being exploited by criminals and to support regulatory compliance and law enforcement efforts. Read more about AML investigation in our blog post here or see what our AML investigation product can do here.
AML Program
A system created to help institutions combat money laundering and terrorist financing. In numerous jurisdictions, financial institutions such as banks, securities dealers, and money services businesses are mandated by government regulations to implement these programs. At a minimum, an anti-money laundering program should include written internal policies, procedures, controls, a designated AML compliance officer, ongoing employee training and an independent review to test the program.
AML Risk Scoring
AML risk scoring is a process used to evaluate and quantify the potential risk of money laundering associated with clients, transactions, or accounts. This system assigns scores based on various risk factors, such as the client’s geographic location, type of business, transaction patterns, and other relevant criteria. The purpose of AML risk scoring is to identify higher-risk areas that may require enhanced due diligence and monitoring, thereby ensuring more effective anti-money laundering controls and compliance with regulatory requirements. Read more bout that in our blog post here.
AML Rule
A specific guideline or criterion used by financial institutions and related entities to detect, prevent, and report money laundering activities. These rules define the thresholds, patterns, and behaviors that may indicate suspicious activity, such as unusual transaction sizes, frequency, or patterns inconsistent with a customer’s profile. AML rules are integral to automated monitoring systems, enabling continuous and efficient scrutiny of financial transactions and customer behavior to ensure compliance with AML/CFT regulations and mitigate financial crime risks.
AML Trainings
Educational programs designed to equip employees of financial institutions and other relevant entities with the knowledge and skills necessary to detect, prevent, and report money laundering and terrorist financing activities. The goal is to ensure that staff are well-informed about AML/CFT regulations and best practices, thereby enhancing the organization’s overall compliance and effectiveness in combating financial crimes. AMLYZE also offers AML trainings, and you can check here AML training programs currently available.
Anti-Money Laundering (AML)
Anti-Money Laundering (AML) is a set of laws, regulations and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML efforts are aimed at detecting, preventing, and reporting activities related to money laundering and terrorist financing. Financial institutions and other regulated entities are required to implement AML programs, which typically include measures such as customer due diligence, transaction monitoring and reporting of suspicious activities to the authorities.
Application Programming Interface (API)
In the context of AML/CFT software providers, APIs are interfaces that enable seamless interaction between their systems and other software applications or databases. They facilitate data integration, access to external sources like regulatory lists, automation of AML/CFT processes such as customer screening and transaction monitoring, and customization of solutions to meet specific institutional needs. APIs enhance efficiency, interoperability, and scalability of AML/CFT software, supporting effective compliance with regulatory requirements and mitigating financial crime risks.
Asset Freeze
A legal process in which regulatory authorities or courts restrict access to and control over an individual’s or entity’s assets. This measure is taken to prevent the transfer, withdrawal, or disposal of assets suspected to be involved in illegal activities such as money laundering, terrorist financing, or other financial crimes. Asset freezes help preserve the availability of assets for potential confiscation or restitution and are a critical tool in AML/CFT enforcement to disrupt and deter criminal activities.
B
Bank Secrecy
It refers to regulations in countries that forbid banks from disclosing details about an account, including its existence, without the account holder’s consent. This restricts the exchange of information between financial institutions and regulators across international borders. One of FATF’s 40 Recommendations emphasizes that countries should ensure secrecy laws do not hinder the enforcement of FATF Recommendations.
Banking as a Service (BaaS)
It is a business model that allows non-bank companies, ranging from technology companies to start-ups, to provide better access to their services by partnering with financial institutions and providing their customers with access to the financial services offered by financial institutions through API technology or platforms. AMLYZE has launched a service specifically designed to meet the needs of BaaS service providers. You can read more about this concept here.
Basel AML Index
This index is produced by the Basel Institute on Governance. This index is a research-based ranking that assesses countries’ risk levels regarding money laundering and terrorist financing. It evaluates countries based on various factors such as legal and institutional frameworks, corruption levels, financial transparency, and the quality of anti-money laundering (AML) and counter-terrorism financing (CFT) measures.
Beneficial Owner
Beneficial owner refers to the natural person who ultimately owns, controls, or benefits from a legal entity or arrangement. This includes individuals who have ownership interests in a corporate entity, trust, or other types of legal structures. Identifying the beneficial owner is crucial for financial institutions and regulators to understand the true ownership and control structure of their customers, ensuring transparency and accountability in financial transactions and preventing misuse of the financial system for illicit purposes.
Beneficiary
Beneficiary is the natural person who is designated to ultimately receive the funds or benefits from a financial transaction or account. Identifying beneficiaries is important for financial institutions to understand the purpose and intended use of funds, ensuring compliance with regulatory requirements, and mitigating risks related to money laundering and terrorist financing.
Bitcoin Mixer (or Tumbler)
A service that mixes or blends potentially identifiable cryptocurrency funds with others to obscure the origin and ownership of the funds. This process, also known as “tumbling,” involves pooling together bitcoins from multiple users and then redistributing them, making it difficult to trace the transaction history. Bitcoin mixers are often used to enhance privacy and anonymity, but they are also associated with money laundering and other illicit activities, making them a focus of AML/CFT regulations and enforcement efforts.
Blacklist
In the context of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), a blacklist refers to a list of individuals, entities, countries, or jurisdictions that are identified as high-risk or sanctioned due to their involvement in illegal activities such as money laundering, terrorist financing, or other financial crimes.
Blockchain Analysis
The process of examining and interpreting data on a blockchain to track the flow of cryptocurrency transactions. This analysis helps identify patterns, detect suspicious activities, and trace the origin and destination of funds, aiding in Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) efforts by providing insights into potentially illicit activities.
Business Email Compromise
Business Email Compromise is a type of cybercrime where attackers use email fraud to target organizations. The goal is typically to deceive employees into transferring money or sensitive information to the attackers. This is often achieved by impersonating high-level executives, suppliers, or trusted business partners, often through phishing or spoofing techniques. BEC can result in significant financial losses and data breaches.
C
Cash Transaction Report (CTR)
CTR is a report that financial institutions, such as banks, are required to submit to the relevant regulatory authorities, such as the local Finance intelligence unit (FIU) or similar organizations. CTRs are part of anti-money laundering (AML) and countering the financing of terrorism (CTF) efforts. A CTR is usually generated for every cash transaction above a certain threshold. The threshold can vary from country to country but is usually set at a relatively high level to focus on larger transactions.
Compliance
Compliance refers to the adherence to laws, regulations, guidelines, and standards relevant to an organization’s operations and industry. In the context of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), compliance involves implementing policies, procedures, and controls to prevent, detect, and report suspicious activities that may involve money laundering or terrorist financing. Compliance efforts aim to uphold legal requirements, mitigate risks, and maintain the integrity and reputation of the organization while contributing to broader efforts to combat financial crime globally.
Compliance Officer
A Compliance Officer is an individual within an organization responsible for ensuring that the organization adheres to legal and regulatory requirements, industry standards, and internal policies. In the context of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), the Compliance Officer oversees the implementation of AML/CFT programs and controls. Their responsibilities include conducting risk assessments, developing compliance policies and procedures, monitoring transactions for suspicious activities, training staff on regulatory requirements, and reporting suspicious transactions to authorities as required by law. The Compliance Officer plays a critical role in maintaining the organization’s integrity, reputation, and compliance with AML/CFT regulations.
Correspondent Banking
Correspondent banking refers to the arrangement where one bank (the correspondent bank) provides banking services to another bank (the respondent bank). Typically, large international banks serve as correspondents for numerous other banks globally. These services may include cash management, such as interest-bearing accounts in various currencies, international wire transfers, check clearing, payable-through accounts, and foreign exchange services.
Countering the Financing of Terrorism (CFT)
Countering the Financing of Terrorism involves measures and regulations implemented by governments and financial institutions to detect, prevent, and deter the use of funds for terrorist activities. This includes monitoring financial transactions, conducting risk assessments, identifying, and freezing terrorist assets, and reporting suspicious activities to relevant authorities. The goal is to disrupt the financial networks that support terrorist organizations and activities, thereby enhancing global security and stability.
Conflict of Interest
In the context of Anti-Money Laundering (AML), a conflict of interest refers to a situation where personal or financial interests interfere with the objective and impartial execution of AML responsibilities. It can lead to biased decision-making or actions that compromise the effectiveness of AML measures, regulatory compliance, and ethical standards within financial institutions and regulatory bodies. Identifying and managing conflicts of interest is essential to uphold the integrity and credibility of AML efforts and ensure the protection of the financial system from illicit activities.
Credit Cards
Credit cards are plastic cards issued by financial institutions that allow users to make purchases and obtain cash advances on credit up to a specified limit. The cardholder receives a bill from the issuer for repayment of the credit used. There is a risk of money laundering when payments for the credit card balance are made using illicit funds gained through criminal activities.
Crypto Scam
A fraudulent scheme involving cryptocurrencies where scammers deceive victims to steal their digital assets. This can take many forms, including fake investment opportunities, phishing attacks, Ponzi schemes, and fraudulent initial coin offerings (ICOs). Crypto scams exploit the anonymity and lack of regulation in the cryptocurrency space, often resulting in significant financial losses for the victims.
Cross Border Payments
Payments that involve more than one country, whether by physically transporting cash across an international border, or by transferring money electronically from one country to another.
Cuckoo Smurfing
This method is relatively simple compared to other forms of money laundering. Essentially, Cuckoo Smurfing involves breaking large transactions down into smaller ones in order to steal or launder money from the government. This technique is often used as a way to avoid paying taxes illegally.
Custodian
A custodian is a bank, financial institution, or entity entrusted with managing, administering, or safeguarding assets on behalf of individuals or institutions. Custodians hold assets to mitigate the risk of theft or loss and typically do not engage in active trading or handling of the assets themselves. Their primary role is to ensure the safekeeping and security of the assets they oversee.
Customer Due Diligence (CDD)
CDD involves implementing policies, practices, and procedures within a financial institution to accurately anticipate the types of transactions a customer is expected to conduct. This process encompasses verifying the customer’s identity and establishing a standard of account activity to detect transactions that deviate from typical or anticipated patterns.
Customer Risk Assessment
A systematic process used by financial institutions and related entities to evaluate the potential risks associated with a customer in terms of money laundering and terrorist financing (AML/CFT). This assessment involves analyzing various factors, including the customer’s identity, financial transactions, geographic location, and the nature of their business activities, to determine their overall risk level. The goal is to implement appropriate monitoring and control measures tailored to the customer’s risk profile, ensuring compliance with regulatory requirements, and preventing illicit activities. You can read our blog post on AML risk assessment here or check our Customer Risk Assessment product here.
Customer Screening
The process of verifying and assessing potential and existing customers against various regulatory watchlists, sanctions list, politically exposed persons (PEP) lists, and adverse media sources. This is done to identify individuals or entities that may pose a risk of money laundering, terrorist financing, or other financial crimes. Customer screening helps financial institutions and related entities ensure compliance with AML/CFT regulations, mitigate risks, and maintain the integrity of their operations by preventing illicit activities and safeguarding against reputational damage. Here you can check what product AMLYZE offers for customer screening.
D
Dataset Provider
A dataset provider is an entity that gathers, compiles, and supplies datasets containing relevant information such as sanctions lists, politically exposed persons (PEPs) data, adverse media reports, and other sources of information pertinent to Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) compliance. Check out here a full list of our partnerships with leading dataset providers.
Debit Cards
A debit card allows account holders to withdraw funds directly from their bank account to pay for purchases or obligations. It can be used in various locations, including online. Debit cards also facilitate cash withdrawals and cash-back transactions at ATMs.
Deep Fake
A deepfake is a synthetic media — typically video or audio — that uses artificial intelligence and machine learning techniques to create realistic but fake representations of people. Deepfakes can manipulate existing images, videos, or sounds to make it appear that someone is saying or doing something they never actually said or did. This technology often relies on deep learning algorithms, particularly generative adversarial networks, to produce highly convincing results. Deepfakes can be used for various purposes, including entertainment, education, and malicious activities like misinformation, fraud, or identity theft.
Dynamic Customer Risk Scoring
Dynamic customer risk scoring is a methodology used by financial institutions to assess the risk associated with individual customers in real time or periodically, based on their behavior, transactions, and other relevant factors. Unlike static risk scoring, which assigns a fixed risk level to customers, dynamic risk scoring adjusts the risk level dynamically as new information becomes available.
Domestic Transfer
A domestic transfer is an electronic funds transfer where both the originator and beneficiary institutions are situated within the same jurisdiction. This type of transfer occurs entirely within the borders of a single country, even if the infrastructure used to process the transfer is located elsewhere or operates online.
DORA
The Digital Operational Resilience Act (DORA) is a regulation by the European Commission aimed at establishing a comprehensive framework for the operational resilience of the digital sector, including financial services, across the European Union (EU). DORA seeks to enhance the ability of firms to withstand and recover from cyber threats and incidents, ensuring the continuity of essential services and the protection of customer data.
Dual-Use Goods
Dual-use goods refer to items, materials, or technologies that can be used for both civilian and military purposes. These goods have legitimate civilian applications but can also be repurposed for military or proliferation-related activities. Examples include chemicals, electronics, software, and manufacturing equipment.
Due Diligence
Due diligence involves the process of thoroughly investigating and verifying information pertaining to individuals, entities, transactions, or business relationships. It is essential for assessing risks and ensuring compliance with regulatory standards, particularly in fields such as Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), and Know Your Customer (KYC) practices.
E
Egmont Group of Financial Intelligence Units
The Egmont Group is comprised of multiple national financial intelligence units (FIUs) that convene regularly to enhance the capabilities of FIUs and promote collaboration, particularly in information exchange, training, and expertise sharing. The group aims to facilitate a platform where FIUs can strengthen cooperation in combating money laundering and terrorist financing and support the implementation of domestic initiatives in this area.
Electronic money
Electronic money, often abbreviated as e-money or e-cash, refers to digital currency stored and transacted electronically. It is typically represented and stored in electronic form, either on a device (such as a computer or smartphone) or on a physical medium (such as a microchip on a card). Electronic money allows for electronic payments and transactions without the need for physical cash.
Electronic Money Institution (EMI)
An Electronic Money Institution (EMI) is a type of financial institution that is licensed to issue electronic money and provide related payment services. EMIs are regulated entities that offer electronic payment solutions, including issuing electronic wallets, prepaid cards, and facilitating electronic money transfers. They operate under regulatory frameworks specific to electronic money, ensuring compliance with legal and regulatory requirements to safeguard consumer funds and promote financial transparency in digital transactions.
Enterprise-Wide Risk Assessment (EWRA)
Enterprise-Wide Risk Assessment. An EWRA is a comprehensive evaluation of an organization’s exposure to money laundering and terrorist financing risks. This assessment helps financial institutions and other regulated entities understand, identify, and mitigate these risks across the entire organization.
EU AML Package
The EU AML package refers to a comprehensive set of legislative measures and regulations aimed at enhancing Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) frameworks across European Union (EU) member states. This package includes directives, regulations, and guidelines designed to strengthen the EU’s ability to combat financial crime, improve transparency in financial transactions, and harmonize AML/CFT standards across the EU.
European Banking Authority (EBA)
It is an independent EU authority that works to ensure effective and consistent regulation and supervision across the European banking sector. EBA’s main responsibilities include conducting stress tests on banks, establishing guidelines for banking practices, and promoting harmonized regulatory standards to maintain financial stability and protect consumers within the EU. Additionally, EBA facilitates cooperation among national supervisory authorities and provides advice to the European Commission on banking-related issues. AMLYZE is involved in the work of the EBA through its representative in the EBA’s Banking Stakeholder Group, which is a key advisory group for the EBA’s work on regulatory and implementing technical standards, guidelines and recommendations where these do not relate to individual financial institutions.
Europol
Europol is the EU’s law enforcement agency. Its main goal is to help achieve a safer Europe for the benefit of all EU citizens. In the area of anti-money laundering, Europol provides member states’ law enforcement authorities with operational and analytical support via the Europol liaison officers (ELOs) and its analysts, as well as state-of-the-art databases and communication channels. AMLYZE team members have gained valuable experience in institutions such as Europol.
Evasion
The act of avoiding or circumventing sanctions to engage in prohibited activities without detection.
EWRA
EWRA (Enterprise-Wide Risk Assessment) is a comprehensive evaluation conducted by financial institutions to identify, assess, and mitigate money laundering (AML) and terrorist financing (CFT) risks across the entire organization. This includes analyzing customer profiles, geographic locations, products and services, and transaction types to ensure regulatory compliance and effective risk management.
F
False Negative
A situation where either a hit identified during the screening process as a possible alert is incorrectly dismissed, despite actually matching a target on a sanctions list, or an activity that should have triggered a hit is missed because the screening process is not calibrated to detect it, such as a target match that goes unidentified due to overly high thresholds. The AMLYZE transaction monitoring tool is renowned in the market for its 40% reduction in false positives.
False Positive
A hit identified during the screening process that appears to be a possible alert but, upon review, is determined not to match any target listed on a sanctions list. The AMLYZE transaction monitoring tool is renowned in the market for its 62% reduction in false positives.
First Line of Defense
In the context of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), the first line of defense refers to the operational units within a financial institution or organization that directly interact with customers and handle day-to-day transactions. These units include front-line staff, relationship managers, customer service representatives, and operational teams responsible for onboarding customers, processing transactions, and conducting business activities.
FIAT Money
Fiat money is government-issued currency that is not backed by a physical commodity like gold or silver. Its value is derived from the trust and confidence people have in the issuing government. Fiat money is used as a medium of exchange, store of value, and unit of account in economies worldwide. Examples include the US dollar, euro, yen, and other national currencies. It contrasts with commodity money, which has intrinsic value based on the material it is made of.
Financial Action Task Force (FATF)
The Financial Action Task Force (FATF) was established in 1989 by the Group of Seven industrial nations to promote the implementation of national and global measures against money laundering. It serves as an international policymaking body that sets standards for anti-money laundering and counter-terrorist financing measures worldwide. While its Recommendations are not legally binding, they are widely influential. FATF’s membership includes 38 countries and 2 international organizations. These 40 members are at the core of global efforts to combat money laundering and terrorist financing. FATF also publishes annual typology reports that highlight current trends and methods related to money laundering and terrorist financing.
Financial Intelligence Unit (FIU)
A central national agency tasked with receiving, analyzing, and disseminating reports on suspicious transactions to relevant authorities. AMLYZE team members have gained valuable experience while working in FIUs.
First Line of Defense
In a sanction’s compliance program’s governance structure, the first line of defense, also known as the front line, comprises relationship managers and other customer-facing employees involved in the onboarding and contracting phases. They are responsible for gathering sufficient information to enable effective screening of customers, their owners, and controllers. Typically, the first line of defense owns and manages the collection of simplified due diligence information.
FRAML
FRAML is an abbreviation of Fraud Prevention and Anti-Money Laundering. It is a term more and more used in the compliance world. It describes an integrated approach to managing both fraud and money laundering risks within financial institutions. The term has emerged recently as some financial institutions and regulators have recognized the overlapping nature of fraud and money laundering activities. AMLYZE has also integrated the FRAML concept into its product to varying degrees. Read more about FRAML in our blog post here.
Fraud
Intentional deception or misrepresentation made by a person or entity to secure an unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can involve various schemes, such as financial fraud, identity theft, investment scams, and embezzlement. It typically results in financial loss or harm to the victim and is a significant focus in AML efforts to detect and prevent illicit activities and ensure compliance with regulatory requirements.
Fraud Prevention
Measures and strategies employed by organizations to detect, mitigate, and stop fraudulent activities, increasingly intertwined with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) efforts. These include assessing risks, implementing controls like authentication systems and fraud detection tools, educating stakeholders, leveraging technology, and fostering collaboration. This integrated approach aims to safeguard against financial losses, maintain trust, and ensure compliance with regulatory requirements to combat financial crimes effectively. Read here our blog post how Fraud Prevention + Anti Money Laundering, or FRAML, is gaining traction in the compliance industry.
Fraudster
A fraudster is an individual or entity that engages in fraudulent activities, which involve deceitful practices to deceive others for financial gain or other benefits. Fraudsters typically employ various schemes and tactics to manipulate victims into providing money, sensitive information, or access to assets under false pretenses.
Freeze
To prevent or restrict the exchange, withdrawal, liquidation, or use of assets or bank accounts. Unlike forfeiture, frozen property, equipment, funds, or other assets remain the property of the natural or legal persons who held an interest in them at the time of the freezing and may continue to be administered by third parties. Courts may implement a freeze to prevent assets from being moved or dissipated.
Fuzzy match
A fuzzy match in sanctions screening refers to the process of identifying potential matches between names or entities in a sanctions list and those in a financial institution’s database, even when there are slight variations or inaccuracies in spelling, formatting, or other details. This technique helps in detecting and flagging possible matches that may not be exact but are sufficiently similar to warrant further investigation. Fuzzy matching increases the effectiveness of sanctions screening by accounting for common discrepancies such as typographical errors, transliterations, and alternate spellings. You can read more about the key points of fuzzy match in one of AMLYZE’s case studies.
G
Governance
In the context of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), governance refers to the framework of rules, processes, and structures that guide and oversee the management and operation of an organization’s AML/CFT efforts.
Grey List
A grey list is a list of entities considered suspicious or higher risk for potentially causing negative impacts to a firm. In the context of sanctions, the greylist includes countries with strategic deficiencies in their anti-money laundering and counter-terrorism financing regimes. These countries have not made sufficient progress or have not committed to action plans to address the deficiencies identified by the Financial Action Task Force (FATF).
H
Hit
A potential match or name match in the sanctions screening process indicates a possible sanctioned person.
Human Trafficking
Human trafficking involves the exploitation of individuals through force, fraud, or coercion for purposes such as forced labor, sexual exploitation, or organ harvesting. It is considered a severe violation of human rights and is often associated with organized crime networks that profit from exploiting vulnerable individuals. In the context of Anti-Money Laundering (AML) efforts, financial transactions related to human trafficking may involve laundering proceeds from illegal activities, necessitating vigilance and reporting to authorities to combat this crime effectively.
I
Identity Theft
The unauthorized use of someone else’s personal information, such as name, Social Security number, or financial details, to commit fraud or other crimes. This can result in financial loss, damage to the victim’s credit, and other legal or personal consequences. Identity theft is a significant concern in the context of Anti-Money Laundering (AML) efforts, as stolen identities can be used to open fraudulent accounts and launder money.
Investigative Journalism
Investigative journalism is a form of reporting that involves in-depth research and analysis to uncover hidden or sensitive information, often related to corruption, fraud, government misconduct, or criminal activities. It aims to expose wrongdoing, hold individuals and institutions accountable, and inform the public about issues of significant public interest. In the context of Anti-Money Laundering (AML), investigative journalism plays a crucial role in uncovering financial crimes, exposing money laundering schemes, and raising awareness about illicit activities that undermine financial integrity and stability. AMLYZE supports investigative journalism as part of the fight against financial crime around the world, and AMLYZE experts comment on stories covered by investigative journalists.
Information Sharing
The practice of exchanging relevant data and intelligence among financial institutions, regulatory bodies, and law enforcement agencies to combat money laundering and terrorist financing effectively. This process includes sharing details about suspicious transactions, customer identities, and risk assessments to enhance collective efforts in identifying and mitigating financial crimes. Information sharing helps build a comprehensive understanding of illicit activities, fosters collaboration, and ensures compliance with AML/CFT regulations, ultimately strengthening the integrity and security of the financial system.
International Monetary Fund
The International Monetary Fund (IMF) is an international organization that promotes international monetary cooperation, exchange stability, balanced growth of international trade, and financial stability. While the IMF itself does not directly enforce AML/CFT regulations, it plays a significant role in supporting member countries’ efforts to strengthen their financial systems and implement effective AML/CFT measures through technical assistance, capacity building, and policy advice.
K
Know Your Business (KYB)
Know Your Business (KYB) refers to the process through which businesses verify the identity and assess the risk associated with their corporate clients or business partners. It involves gathering information about the business entity, such as its legal structure, beneficial owners, business activities, and financial health, to ensure compliance with regulations and to mitigate risks related to money laundering, fraud, and other illicit activities. KYB aims to enhance transparency in business relationships and to protect against potential financial crimes.
Know Your Customer (KYC)
Know Your Customer (KYC) refers to the process through which businesses verify the identity of their clients or customers in order to assess potential risks of illegal intentions such as money laundering. Read our blog post here about the best KYC software providers.
L
Layering
Layering is the second phase of the classic three-step money laundering process, occurring between placement and integration. It involves distancing illegal proceeds from their original source by creating a series of complex financial transactions. The goal is to obscure the audit trail and provide anonymity to the illicit funds.
Legal Risk
Legal risk refers to the potential for losses, adverse consequences, or legal liabilities arising from violations of laws, regulations, or contracts. In the context of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), legal risk encompasses the threat of sanctions, fines, legal actions, and reputational damage resulting from non-compliance with AML/CFT laws and regulations.
M
MiFID
MiFID stands for the Markets in Financial Instruments Directive. It is a European Union directive that regulates firms that provide services to clients linked to financial instruments and the venues where those instruments are traded. MiFID aims to increase competition and consumer protection in investment services, including requirements related to transparency, investor protection, and market integrity. While MiFID primarily focuses on securities markets, its provisions can intersect with Anti-Money Laundering (AML) requirements, particularly concerning customer due diligence and transaction monitoring in financial services.
Money Laundering
Money laundering is the process of concealing or disguising the existence, source, movement, destination, or illegal application of illicitly derived property or funds to make them appear legitimate. This typically involves a three-part system: first, placing funds into the financial system; second, layering transactions to obscure the source, ownership, and location of the funds; and third, integrating the funds into society as legitimate assets or holdings. The definition and legal framework for money laundering vary among countries where it is recognized as a criminal offense.
Money Laundering Reporting Officer (MLRO)
The Money Laundering Reporting Officer (MLRO) is a key role designated in various international regulations. The MLRO is responsible for overseeing a firm’s anti-money laundering (AML) activities and programs, including filing reports of suspicious transactions with the national Financial Intelligence Unit (FIU). They play a crucial role in the implementation of AML strategies and policies within the organization, ensuring compliance with legal requirements and promoting effective measures against money laundering and terrorist financing.
Money Laundering Stages
The three stages of introducing laundered funds into the financial system are: placement, layering, and integration/extraction.
Placement is where illicit funds are initially introduced into the legitimate financial system. It often involves placing cash into banks or using other methods to get the illegal funds into the financial network.
In the layering stage, the source of the illicit funds is disguised through a series of complex financial transactions. Funds may be moved through multiple accounts, investments, or countries to obscure their origin and make it difficult to trace.
The final stage of integration/extraction involves integrating the laundered funds into the legitimate economy or extracting them for personal use. This can include purchasing assets like real estate or luxury goods or converting funds back into cash through apparently legitimate transactions.
Money Mule
An individual who is recruited, often unknowingly, by criminals to transfer illegally obtained money between different accounts or jurisdictions. Money mules are used to launder money and evade detection by law enforcement agencies. They may be persuaded through various means, such as job offers or romance scams, and are typically unaware of the criminal nature of their activities. Involvement as a money mule is illegal and can result in serious legal consequences for those implicated.
MONEYVAL
MONEYVAL, the Council of Europe’s Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures, was established in 1997 by the Committee of Ministers of the Council of Europe. Formerly known as PC-R-EV, MONEYVAL conducts self and mutual assessments of anti-money laundering measures across Council of Europe countries that are not members of the Financial Action Task Force (FATF). It operates as a sub-committee of the Council of Europe’s European Committee on Crime Problems (CDPC), focusing on evaluating and improving anti-money laundering efforts within its member states. AMLYZE team members have gained valuable experience while working in institutions such as MONEYVAL.
MiCA Directive
The MiCA directive refers to the Markets in Crypto-Assets Regulation, which is a legislative proposal by the European Commission aimed at regulating cryptocurrencies and other crypto-assets within the European Union (EU). MiCA seeks to establish a comprehensive framework for the issuance, trading, and custody of crypto-assets, including stablecoins and utility tokens.
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Nominee Director
A nominee director is an individual who is appointed to act on behalf of the actual directors or shareholders of a company. While they may not have direct involvement in the company’s operations or decision-making, their role is primarily to fulfill legal requirements or provide confidentiality for the actual owners. Although the use of nominee shareholders is declining, the practice of appointing nominee directors remains common in certain jurisdictions.
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Offshore Company
In literal terms, “offshore” means away from one’s home country; for example, for someone living in Europe, the U.S. would be considered “offshore.” In the context of money laundering, the term refers to jurisdictions that are considered favorable for foreign investments due to factors such as low or no taxation and strict bank secrecy regulations.
ODD Assessment
ODD stands for “Onboarding, Due Diligence”. An ODD assessment refers to the process of conducting thorough due diligence on potential customers or business partners during the onboarding process. This assessment aims to gather comprehensive information about the customer’s identity, background, business activities, and financial history to assess the risk of money laundering, terrorist financing, or other illicit activities.
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Payment Service Provider
A financial institution or company that facilitates online payment transactions between merchants and customers. PSPs offer a variety of services, including payment processing, gateway services, fraud detection, and currency conversion, enabling businesses to accept a wide range of payment methods such as credit cards, debit cards, and digital wallets. PSPs play a crucial role in ensuring secure, efficient, and compliant transaction processing within the framework of Anti-Money Laundering (AML) regulations.
Payment Screening
Payment screening is a method of screening that specifically examines payment messages. Payment screening is conducted on current customers and occurs prior to the processing of a payment or message. This process relies on predefined templates, codes, and acronyms within payment messages to identify certain information. The data in these templates is often standardized by third parties, limiting the firm’s control over how the information is formatted or presented. Here you can check what product AMLYZE offers for payment screening.
Phishing Scam
Phishing is a form of cyber-attack where attackers impersonate legitimate organizations or individuals to trick recipients into revealing sensitive information, such as login credentials, credit card numbers, or personal details. Phishing scams typically involve fraudulent emails, text messages, or websites designed to appear genuine, often prompting recipients to click on malicious links, download malicious attachments, or enter sensitive information into fake forms.
Pig Butchering
A type of scam where fraudsters manipulate victims into making investments in fake or fraudulent schemes, often by building a sense of trust and then gradually encouraging larger investments. The term refers to the way scammers “fatten up” their victims by gaining their confidence and getting them to invest more before ultimately stealing the accumulated funds. This scam is increasingly relevant in the context of AML as it often involves laundering the stolen money through various channels.
Placement
The initial phase of the money laundering process involves the physical disposal of proceeds obtained from illegal activities. This typically involves placing illicit funds into the financial system through various means, such as deposits, investments, or purchases, to integrate them into the legitimate economy.
Politically Exposed Person (PEP)
Politically Exposed Person (PEP) is an individual who holds or has held prominent public positions or functions in a foreign country. This includes positions such as heads of state or government, senior politicians, senior government officials, judicial or military officials, senior executives of state-owned corporations, and important political party officials. The definition also encompasses their immediate family members and close associates. PEP status typically excludes individuals in lower or middle-ranking positions within these categories. Regulations in different countries may further define PEPs to include both domestic and foreign individuals. Read our blog post about PEP screening here.
Ponzi Scheme
A Ponzi scheme is a fraudulent investment scam named after Charles Ponzi, an Italian immigrant who gained notoriety in the U.S. for such a scheme in the early 20th century. In a Ponzi scheme, investors are enticed to participate with promises of high returns that are supposedly generated through investments. However, the returns are paid using the capital from new investors rather than from actual profits. The scheme can continue if there is a steady inflow of new investors’ money to pay off existing investors. Ultimately, Ponzi schemes collapse when the flow of new investments slows down or stops, leading to financial losses for investors and often resulting in legal repercussions for the scheme operator.
Predicate Crime
Predicate crimes, also known as specified unlawful activities, refer to criminal offenses whose proceeds can potentially lead to prosecution for money laundering if they are involved in a transaction. Anti-money laundering laws typically encompass a broad range of such underlying crimes, which may include felonies, or all offenses listed in the criminal code of a jurisdiction. These crimes serve as the basis for money laundering charges, as the concealment or use of proceeds from predicate crimes through financial transactions is illegal.
Prepaid Card
A prepaid card is a payment card that is pre-loaded with a specific amount of money. It functions similarly to a debit card but is not linked to a bank account. Users can spend up to the amount loaded on the card and can typically reload it as needed. Prepaid cards are often used as an alternative to traditional banking for making purchases, paying bills, or receiving funds. They are also subject to Anti-Money Laundering (AML) regulations to prevent their use in illegal activities.
Private Banking
Private banking refers to a specialized department within a financial institution that offers personalized financial services and products to high-net-worth individuals (HNWIs) and affluent clients. These services are tailored to meet the unique needs and preferences of wealthy clients, often including confidentiality measures, complex beneficial ownership structures, offshore investment opportunities, tax planning solutions, and credit extension services. Private banking aims to provide comprehensive wealth management strategies, investment advice, and exclusive banking services that cater to the specific financial goals and lifestyle requirements of affluent individuals.
Proliferation Financing
The provision of funds or financial services used to support the development, acquisition, or spread of weapons of mass destruction (WMDs) and their delivery systems. This type of financing is illegal and subject to international sanctions and regulations. Combating proliferation financing is a critical component of global security efforts and Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) frameworks.
Proof of Address
Proof of address is a document that verifies an individual’s residential address. It is commonly required by financial institutions and other entities as part of the Know Your Customer (KYC) and Anti-Money Laundering (AML) processes to ensure the identity and legitimacy of their customers. Examples include utility bills, bank statements, rental agreements, and government-issued letters.
Pump and Dump
Pump and dump is a form of securities fraud where individuals or groups artificially inflate the price of a stock or other asset through misleading or false statements (pumping), and then sell off their holdings at the inflated price (dumping), leaving other investors with losses. This scheme typically involves spreading false or exaggerated information to create hype around a stock, attracting unsuspecting investors who buy at inflated prices.
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Ransomware
Ransomware is a type of malicious software (malware) designed to block access to a computer system or encrypt data until a ransom is paid. It is typically deployed by cybercriminals who exploit vulnerabilities in computer networks or systems to infect them with ransomware. Ransomware poses AML risks primarily through the laundering of ransom payments, which may involve illicit funds and require compliance with AML regulations for financial institutions and cryptocurrency service providers.
Real-time Transaction Monitoring
Real-time transaction monitoring refers to the automated process of continuously scrutinizing financial transactions as they happen, aiming to detect and flag suspicious activities promptly. It involves analyzing transactional data in real time against predefined patterns and rules to identify anomalies indicative of money laundering, terrorist financing, or other illicit activities. This proactive monitoring approach enables financial institutions to take immediate action by generating alerts for further investigation and reporting, ensuring compliance with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations while mitigating risks associated with financial crime. Check out here more about our real-time transaction monitoring solution.
RegTech
Regtech, short for “regulatory technology,” refers to the use of innovative technology solutions to help businesses comply with regulatory requirements more efficiently and effectively. It involves tools and software designed to automate and streamline processes related to compliance, risk management, and monitoring, particularly in the financial sector. Regtech solutions aim to enhance accuracy, reduce costs, and improve the management of regulatory changes and reporting obligations. AMLYZE is one of the examples of RegTech providers.
Retrospective Transaction Monitoring
Retrospective transaction monitoring refers to the process of reviewing historical financial transactions after they have occurred, typically using data analysis and investigative techniques to identify patterns, trends, or anomalies indicative of suspicious activity. Unlike real-time monitoring which detects suspicious transactions as they happen, retrospective monitoring involves looking back at past transaction data to uncover potential instances of money laundering, terrorist financing, or other financial crimes. This retrospective analysis helps financial institutions and regulatory authorities identify and investigate suspicious activities that may have gone unnoticed initially, thereby strengthening compliance efforts and mitigating risks associated with financial crime. Check out here more about our retrospective transaction monitoring solution.
Red Flag
A red flag is a warning signal that alerts individuals or institutions to a potentially suspicious situation, transaction, or activity. Red flags indicate the need for further investigation or scrutiny to determine whether the activity is legitimate or involves illegal or unethical behavior. These indicators help identify anomalies, unusual patterns, or inconsistencies that may suggest financial crime, fraud, or other illicit activities.
Regulatory Inspection
A formal examination conducted by governmental or regulatory authorities to assess the compliance of financial institutions, businesses, or organizations with applicable laws, regulations, and standards. Regulatory inspections aim to ensure adherence to legal requirements and best practices in various areas such as financial transactions, consumer protection, safety standards, and environmental regulations. During inspections, regulators review records, conduct interviews, and evaluate operational procedures to verify compliance, identify deficiencies, and recommend corrective actions if necessary. Successful compliance with regulatory inspections is crucial for maintaining trust, avoiding penalties, and upholding the integrity of the regulated industry. Check out here our guide on how to prepare for the regulatory inspection.
Risk Appetite
Risk appetite refers to the level of risk that an organization is willing to accept in pursuit of its objectives and opportunities. It reflects the organization’s tolerance for risk and guides its risk management decisions and strategies. A firm’s risk appetite is influenced by factors such as its business objectives, regulatory environment, financial capacity, and corporate culture. It is typically formalized through a Risk Appetite Statement or Framework, which outlines the types and levels of risks that the organization is willing to undertake or avoid. Organizations assess their risk appetite through a structured risk-assessment process, considering factors such as the potential impact of risks on their operations, reputation, and stakeholders. This assessment helps in allocating resources effectively to manage risks, implement controls, and maintain compliance with regulations. Risk appetite can be defined at both an enterprise-wide level, encompassing the entire organization, and at more specific levels such as by department or business unit, to align with different operational contexts and objectives.
Risk Based Approach
A risk-based approach involves evaluating the different risks linked to various types of businesses, clients, accounts, and transactions to enhance the effectiveness of an anti-money laundering program.
Romance Scam
A type of fraud in which a scammer creates a fake online persona to establish a romantic relationship with a victim, with the intention of exploiting their emotions to gain financial benefit. The scammer may ask for money for various fabricated reasons, such as medical emergencies, travel expenses, or other personal needs. This scam often involves elaborate stories and prolonged manipulation, making it a significant concern for AML efforts as the funds obtained are often laundered through various channels.
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Sanctions
Sanctions are punitive or restrictive measures imposed by individual countries, regimes, or coalitions to induce a change in behavior or policy. They can involve restrictions on trade, financial transactions, diplomatic relations, and movement, and may be implemented in specific or broad terms. Sanctions are also known as restrictive measures.
Sanctions Evasion
Sanctions evasion refers to the intentional effort to conceal or remove the involvement of sanctioned entities, individuals, or places in a transaction or series of transactions. When successful, sanctions evasion enables a business that would otherwise be flagged, taxed, restricted, or prohibited to proceed without impediment.
Sanctions Lists
Sanctions lists refer to lists of individuals, entities, or countries that are subject to sanctions imposed by supranational bodies like the United Nations Security Council Resolutions (UNSCR). These lists must be screened against to ensure compliance with international sanctions regulations. Depending on the jurisdiction where a business operates, there may also be local sanctions regimes that are mandatory to include in a firm’s sanctions compliance program.
Sanctions Screening
The process undertaken by financial institutions and other entities to screen customers, transactions, and business relationships against lists of sanctioned individuals, entities, and countries. These lists are maintained by governmental bodies and international organizations to enforce political and economic sanctions. Sanction screening aims to prevent prohibited transactions with sanctioned entities, ensuring compliance with sanctions regimes and mitigating risks associated with financial crime and regulatory violations. Automated sanction screening tools compare customer data against these lists in real-time, enabling prompt identification and mitigation of potential risks. Read here our blog post dedicated to basics of sanction screening or check out here our product dedicated to sanctions screening.
Scam
A deceptive scheme or fraud designed to trick individuals into providing money, personal information, or other valuables under false pretenses. Scams can take many forms, including phishing, investment fraud, romance scams, and more. The primary goal is to defraud victims, often resulting in financial loss and compromised personal information. Recognizing and preventing scams is a critical aspect of AML efforts, as the proceeds from scams are often laundered to conceal their illicit origins.
SEPA Instant
SEPA Instant, also known as SEPA Instant Credit Transfer (SCT Inst), is a payment service that allows for instant euro transactions within the Single Euro Payments Area (SEPA). This service enables individuals and businesses to transfer money in euros across SEPA member countries almost instantaneously, 24/7, 365 days a year, including weekends and holidays.
Shelf Company
A shelf company is a business entity that has been incorporated months or years in advance, typically by a law firm or accounting firm, and then placed “on the shelf” until it is needed. Investors may use these shelf companies, also known as “aged” companies, to acquire a business with a clean and established operational history.
Social Engineering
Social engineering is a technique used by cybercriminals to manipulate individuals into divulging confidential information or performing actions that compromise security. Unlike traditional hacking methods that target software vulnerabilities, social engineering exploits human psychology and interactions to gain access to sensitive data or systems.
Source of Funds
Information detailing the origin of money used in a transaction or account. This helps financial institutions verify that the funds are obtained from legitimate activities, ensuring compliance with Anti-Money Laundering (AML) regulations, and preventing the use of illicit funds.
Source of Wealth
Information detailing the origin of an individual’s or entity’s overall financial assets and net worth. It includes the background of how wealth was accumulated, such as through employment, investments, inheritance, or business activities. This helps financial institutions assess the legitimacy of a customer’s wealth, ensuring compliance with Anti-Money Laundering (AML) regulations and preventing the use of illicitly obtained assets.
Straw Man Account
A Straw Man Account is a financial account set up and used to conceal the actual account holder’s identity, typically to facilitate money laundering or other illicit activities.
Suspicious Transaction Report (STR) / Suspicious Activity Report (SAR)
A formal report filed by financial institutions to regulatory authorities when transactions or activities appear unusual or potentially indicative of money laundering, terrorist financing, or other illicit activities. STRs/SARs are crucial for complying with Anti-Money Laundering (AML) regulations and facilitating investigations into suspicious behavior, aiming to safeguard the integrity of the financial system. You can read more about STRs/SARs here in our blog post.
SWIFT Payment
A financial transaction conducted through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, which facilitates secure and standardized communication between banks and financial institutions globally. SWIFT payments enable the transfer of funds, securities, and other financial instruments across international borders, ensuring efficiency and reliability in global banking operations. The SWIFT network assigns unique codes to each member institution, which helps in accurately identifying the sender and receiver of funds, thereby enhancing the security and traceability of international payments.
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Targeted Sanctions
Targeted sanctions refer to measures imposed specifically against a particular entity or individual, often with a defined objective in mind. These sanctions typically involve financial or trade restrictions aimed at limiting movement or activities. They can be implemented either unilaterally by a single country or multilaterally by multiple countries working together. Targeted sanctions are also known as smart sanctions due to their focused nature and intended impact on specific targets.
Tax Fraud
Tax fraud refers to the deliberate falsification or manipulation of information on tax returns or financial documents with the intention of evading taxes owed. It involves illegal activities aimed at reducing tax liability or obtaining refunds through deceptive means.
Tax Haven
Tax havens are countries or jurisdictions that provide favorable tax policies and incentives aimed at attracting foreign investors and depositors seeking to minimize their tax obligations or achieve tax avoidance.
Terrorist Financing
Terrorist financing involves providing funds or financial support to individuals, groups, or organizations that engage in terrorist activities. This can include the collection, management, and transfer of money to fund acts of terrorism or support terrorist networks. Combating terrorist financing is a key focus of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) efforts to prevent the use of financial systems for illicit purposes.
Typology
In the context of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), a typology refers to a specific method, pattern, or modus operandi used by criminals to conduct illicit activities. A typology provides a structured framework for understanding and categorizing various techniques and schemes used for money laundering, terrorist financing, fraud, and other financial crimes. Financial institutions and regulatory authorities study typologies to identify common patterns and behaviors associated with illicit activities. This knowledge helps in developing effective prevention, detection, and enforcement strategies within AML/CFT frameworks. Understanding typologies allows stakeholders to stay ahead of evolving criminal tactics and adapt their compliance measures accordingly to mitigate risks and combat financial crime effectively.
Transaction Monitoring
Transaction monitoring is the process of tracking and analyzing financial transactions to detect potential instances of financial crime. The aim is to prevent illegal activities such as money laundering, terrorist financing and other criminal activities. Financial institutions, such as banks, are required by law to conduct AML transaction monitoring. Read more about transaction monitoring in our blog post here or see what the AMLYZE transaction monitoring product can do here.
Transaction Monitoring Rule
A specific criterion or guideline used in Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) systems to identify suspicious or unusual financial transactions. These rules define thresholds, patterns, and behaviors that may indicate potential illicit activity, prompting further investigation or reporting.
Transaction Monitoring Rule Library
A centralized repository within AML/CFT systems containing a collection of predefined rules and algorithms. These rules are designed to detect suspicious transactions based on regulatory requirements, industry standards, and specific risk factors. The library facilitates efficient management and customization of transaction monitoring rules to enhance compliance and mitigate financial crime risks. AMLYZE’s extensive library of nearly 300 pre-defined rules provides a strong foundation for efficient and compliant transaction monitoring.
Transaction Monitoring Rule Configuration
The process of defining and customizing criteria within Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) systems to detect suspicious financial transactions effectively. AMLYZE allows users to create highly customized transaction monitoring rules through a flexible framework of parameters and filters.
Two-Factor Authentication
Two-Factor Authentication (2FA) is a security process that requires users to provide two different forms of identification to access an account or system. Typically, 2FA combines something the user knows (like a password) with something the user has (like a smartphone or hardware token) or something the user is (like a fingerprint or facial recognition). This extra layer of security helps protect against unauthorized access and enhances the overall security of the system.
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OSINT
OSINT, or Open Source Intelligence, involves collecting and analyzing publicly available information for intelligence purposes. It uses data from the internet, media, public records, academic publications, commercial databases, geospatial data, and public forums.
OSINT is used in national security to monitor threats, in corporate intelligence for market research, in cybersecurity to identify vulnerabilities, in law enforcement to gather evidence, and in journalism to uncover stories and verify facts. The benefits of OSINT include being cost-effective, legal, and comprehensive. However, it faces challenges like data overload, verifying credibility, identifying bias, and handling privacy concerns.
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United Nations
The United Nations (UN) plays a crucial role in setting international standards and policies to combat money laundering and terrorist financing. Through bodies such as the UN Office on Drugs and Crime (UNODC) and the Financial Action Task Force (FATF), the UN develops guidelines, conventions, and resolutions to promote global cooperation, enhance regulatory frameworks, and support member states in implementing effective AML measures.
Unusual Transaction
An unusual transaction is a financial activity that deviates from a customer’s normal behavior or expected patterns and may indicate potential money laundering, fraud, or other illicit activities. Financial institutions monitor for such transactions to identify and investigate suspicious activities, ensuring compliance with Anti-Money Laundering (AML) regulations and protecting the integrity of the financial system.
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Virtual Currency
Virtual currency, also known as cryptocurrency or digital currency, is a type of digital asset that utilizes cryptography for security and operates independently of a central authority, such as a government or financial institution. Virtual currencies are typically decentralized and exist solely in electronic form, with transactions recorded on a distributed ledger, such as a blockchain.
Virtual IBAN
A unique International Bank Account Number (IBAN) assigned to a customer that operates within an existing physical bank account. Virtual IBANs facilitate the receipt and tracking of payments, allowing businesses to streamline reconciliation processes by segregating transactions under different virtual IBANs. While they appear as distinct accounts for payment purposes, all transactions ultimately settle into the primary physical account, enhancing transparency and efficiency in financial management without the need to open multiple bank accounts.
Virtual Asset Service Provider (VASP)
In the realm of cryptocurrency and digital assets, a VASP refers to any business entity or person that provides services involving virtual assets, such as exchanges, wallet providers, and custodial services. VASPs are typically subject to regulatory requirements aimed at preventing money laundering, terrorist financing, and other illicit activities, like traditional financial institutions. Compliance for VASPs often includes customer due diligence, transaction monitoring, and reporting suspicious activities to regulatory authorities, ensuring the integrity and security of the virtual asset ecosystem. Read here our blog post about AML/CFT requirements for the crypto market players.
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Wolfsberg Group
The Wolfsberg Group is an association of thirteen global banks that aims to develop frameworks and guidance for managing financial crime risks, particularly in the areas of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT). The Group provides best practice standards and principles for financial institutions to enhance their AML/CFT controls and promote transparency and integrity in the financial system.
Wire Transfer
A wire transfer is a method of electronically transferring funds from one entity or financial institution to another. It involves the direct transmission of money through a secure network, such as SWIFT (Society for Worldwide Interbank Financial Telecommunication), typically using banking systems or specialized transfer services.
