Confused by all those AML terms and acronyms? In this handy glossary, you’ll find over 120 common AML/CFT words, phases, and abbreviations, as well as a rundown of the major regulatory bodies dedicated to fighting AML/CFT.
Sometimes it can feel like AML compliance procedures and regulation are getting more complex by the day. Just trying to keep up with the alphabet soup of AML terms and acronyms, not to mention the assortment of relevant regulatory bodies and organizations, is a dizzying endeavor.
So if you are confused by all the AML jargon, we have created a glossary of the most common acronyms in the world of AML/CFT compliance. This list is primarily for financial institutions and MSBs in the U.S. and Canada. However, we’ll also, give a brief rundown of some of the major regulatory bodies both within North America and abroad.
AML Terms and Abbreviations
A
Adverse Media Screening- Adverse Media screening, also known as Negative News Screening, is a process to detect and prevent sanction and reputation risk of dealing with persons or entities with associations with financial crime or other relevant negative news. It is conducted via smart tools built on AI and NLP to scan through thousands of global news sources.
AML- Anti-Money Laundering
AML/CTF compliance program- Anti-Money Laundering/Counter-Terrorism Financing compliance program.
A system designed to assist financial institutions, securities dealers and money services businesses in their fight against money laundering, terrorist financing, and other financial crimes. This system generally includes:
- Written internal policies, procedures and controls
- A designated AML compliance officer or team
- Third-party audits
- Comprehensive employee training
AML Compliance Officer- Responsible for the implementation and maintenance of an organization’s AML/CFT compliance program.
AMLA- Anti-Money Laundering Act of 2020
AMLID- Anti-Money Laundering International Database
A compendium of analyses of anti-money laundering laws and regulations, including both domestic laws and international cooperation and information on national contacts and authorities.
ARS- Alternative Remittance System
Any system used for transferring money from one location to another while operating outside of traditional banking channels.
As Soon as Practicable (Canada)- The expected time within which a suspicious transaction report (STR) can be submitted to FINTRAC taking into account the facts and circumstances of the situation.
ASTR (Canada)- Attempted Suspicious Transaction Report
A report that is filed when an individual initiates and then abandons a financial transaction in a way that looks suspicious.
AST- Automated Screening Tool
A sanctions, PEP, and adverse media screening tool powered by AI, natural language processing and machine learning with automated search functionality. ASTs, like our very own SmartScan, offers intelligent search and a scoring engine that works to minimize manual intervention while significantly reducing False Positives.
ATF- Anti-Terrorist Financing
The same thing as Counter Terrorist Financing (CFT) and is often used interchangeably
B
Batch Processing- A type of data processing where related transactions or entries are grouped together and transmitted for structuring and analysis.
Batch Screening- The process of screening an institution’s customer base and other associated entities on a periodic basis. Batch processing, along with API based screening are necessary requirements for modern sanction and PEP screening tools for AML compliance.
Beneficiary- The individual or entity who will ultimately benefit from a transaction and be the final recipient of the funds.
BO- Beneficial Ownership
Beneficial ownership is a term in commercial law which refers to the natural person or persons “who ultimately own or control a legal entity or arrangement, such as a company, a trust, or a foundation”.
BSA- The Bank Secrecy Act
U.S. legislation aimed toward preventing criminals from using financial institutions to hide or launder money. The law requires financial institutions to provide documentation to regulators whenever their clients deal with suspicious cash transactions involving sums over $10,000.
Business Relationship (Canada)- The connection between a reporting entity and a client to conduct financial transactions or provide services related to those transactions. This relationship can be account-based, where the client holds an account with the reporting institution, or non-account-based, but recurring.
C
CAMLO (Canada)- Chief Anti-Money Laundering Officer
Responsible for maintaining and managing records of high risk customers and reporting suspicious activities to the authorities as well as organizing inspections and audits from third-party entities.
CAMS- Certified Anti-Money Laundering Specialist Certification designation from ACAMS.
Cash-Intensive Business- Any business in which customers usually pay with cash for the products or services provided, such as food delivery services and coin-operated machines.
CDD- Customer Due Diligence
The process of assessing customers’ background to determine their identity and the level of risk they possess.
CFT- Counter-Terrorism Financing
CFCS- Certified Financial Crime Specialist designation from ACFCS.
Check Kiting- A form of check fraud that involves taking advantage of the float to make use of non-existent funds in a checking or other bank account. In this way, instead of being used as a negotiable instrument, checks are misused as a form of unauthorized credit.
CIP- Customer Identification Program
Where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a provision of the USA Patriot Act.
Clarification Request (Canada)- A method used to communicate with money services businesses when FINTRAC needs more information about their registration form. This request is usually sent by email.
Compliance Program (Canada)- All elements a reporting entity is legally required to have under the PCMLTFA and associated regulations, to ensure that the organization meets all reporting, record keeping, client identification, and know-your-client requirements.
CRO- Chief Risk Officer
An executive in charge of managing risks to the company that can be categorized into three groups: technical, regulatory, and competitive.
CRS- Common Reporting Standard
The global standard for the automatic exchange of financial account information
CTR- Currency Transaction Reporting
A bank form used in the US to help prevent instances of money laundering. This is a report that U.S. financial institutions are required to file with FinCEN for each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to the financial institution which involves a transaction in currency of more than $10,000.
Currency Smuggling- The illicit movement of large quantities of cash across borders, often into countries without strict banking secrecy, poor exchange controls or poor anti-money laundering legislation.
CVC- Convertible Virtual Currencies
An unregulated digital currency that can be used as a substitute for real and legally recognized currency as defined by the US regulator FinCen in a guidance release May 9, 2020
D
Delisting- When a sanctions target is removed from a sanctions list after the restrictions imposed on them have been lifted
Designated Categories of Offense- Crimes the FATF considers to be money-laundering predicate offenses.
DNFBP- Designated Non-Financial Businesses & Professions
Non-financial businesses and professions designated by the FATF that require extra vigilance, including: casinos, real estate agents, dealers in precious metals, dealers in precious stones, lawyers, notaries, other independent legal professionals and accountants, trusts and company service providers.
DPL- Denied Persons List
A list, published by the Bureau of Industry and Security (BIS), of individuals, entities, or companies that have been denied export privileges, generally due to Export Administration Act violations.
E
EAR- Export Administration Regulations
A set of regulations administered and enforced by the Bureau of Industry and Security, that specifically apply to physical goods or commodities subject to export controls.
EDD- Enhanced Due Diligence
A KYC process that involves the enhanced review of high-risk individuals or companies.
Effectiveness Review- An evaluation conducted at a minimum of every 24 months to test the effectiveness of an organization’s AML compliance program: policies and procedures, risk assessment and ongoing training program. KYC2020 AML Compliance Toolkit can help you manage your Effectiveness Review for FREE.
EIDV- Electronic Identification and Verification
The verification of a person’s identity remotely through digital means
Electronic Funds Transfer Report (Canada)- A report submitted to FINTRAC upon a transmission of instructions for the transfer of CAD 10,000 or more out of or into Canada in a single transaction or in two or more transactions totaling CAD 10,000 or more made within 24 consecutive hours by or on behalf of the same individual or entity.
Embezzlement- The act of taking or misappropriating funds entrusted by an employer or organization for illegal personal use.
Event-Triggered Monitoring- An internal control used to mitigate sanctions risks. Whenever relevant information about an existing customer changes, an interim review of information is conducted prior to a full scheduled review.
Exclusions List- A list of names or entries that are to be excluded from the sanctions screening process.
F
F2R- A secure application accessed over the internet that lets reporting entities manually enter and correct reports, such as STRs and LCTRs, individually (Canada)
False Negative- A hit that is flagged during the screening process as a possible alert, but is subsequently dismissed, yet there is actually a missed match on a sanctions list, or screening activity that is inappropriately calibrated in such a way that the suspicious activity itself is missed. AI based decision systems can help eliminate false positives and speed up customer onboarding and ongoing monitoring.
False Positive- A hit flagged during the screening process as a possible alert, but upon review is found to not be a match to a target named on a sanctions list.
FATCA- The Foreign Account Tax Compliance Act
Passed as part of the HIRE Act, generally requires that foreign financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to payment withholding.
FBAR- Foreign Bank and Financial Accounts
Under the Bank Secrecy Act, foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds, must be reported to the Treasury Department and reporting institutions must keep certain records of those accounts.
FCCR- Financial Crime Country Risk
FFI- Foreign Financial Institution
A Foreign Financial Institution that has registered and agreed to adhere to the requirements set forth by FATCA.
FMSB- Foreign money services business (Canada)
A money services business, that operates outside of Canada, that does not operate a physical location in Canada, yet directs MSB services to persons or entities in Canada.
G
GRC- Governance, Risk & Compliance
An organization’s approach across these three practices: governance, risk management, and compliance
Gatekeepers- Professionals such as lawyers, notaries, accountants, investment advisors, and trust and company service providers who assist in transactions involving the movement of money, and are deemed to have a particular role in identifying, preventing and reporting money laundering.
Greylist- A list of entities that present a higher risk for causing a negative impact to an organization.
H
HIO (Canada)- Head of an International Organization
HNWI- High-net-worth individual
A person with more than US$1 million in liquid assets
I
IBC- International Business Company
An offshore company that is registered in a tax neutral setting
ID&V- Identification & Verification
Inherent Risk- The level of sanctions risks along four categories: customers, products and services, countries, and delivery channels. Inherent risk examines the likelihood and impact of noncompliance prior to considering any controls within the risk management processes.
Internal Evasion- When an organization’s employee commit or facilitate a sanctions violation.
IVTS- Informal Value Transfer System
Any system, mechanism, or network of individuals that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location.
K
KYC- Know Your Customer
AML policies and procedures a financial services institution or MSB must act on to verify the identity, suitability, and risks involved with maintaining a business relationship with a particular customer.
KYE- Know Your Employee
AML policies and procedures for acquiring a better knowledge and understanding of an organization’s employees for the purpose of detecting conflicts of interests, money laundering, past criminal activity and suspicious activity.
KYM- Know Your Member
Common in the Credit Union space where customers are members of the Credit Union
L
LCT- Large Cash Transaction (Canada)
Any cash transactions valued at CAD 10,000 or more (or the equivalent in a foreign currency) that take place within the same 24 hour period for the same customer.
LCTR- Large Cash Transaction Report (Canada)
A report that is filed with FINTRAC when a large cash transaction has taken place.
Listed Person (Canada)- Anyone on a list published in the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism issued under the United Nations Act. You can consult that list of names via the Office of the Superintendent of Financial Institutions.
A listed person includes an individual, a corporation, a trust, a partnership or fund or an unincorporated association or organization that is believed to:
- have carried out, attempted to carry out, participated in or facilitated a terrorist activity; or
- be controlled directly or indirectly by, be acting on behalf of, at the direction of, or in association with any individual or entity conducting any of the above activities.
M
Mandatory Sanctions Lists- International sanctions lists, such as those including targets designated by the United Nations Security Council Resolutions (UNSCR), which must be screened against.
Ministerial Directives (Canada)- The authority to issue directives that require reporting entities to apply measures (which this document calls “countermeasures”) to transactions originating from or destined to designated foreign jurisdictions and entities; and the authority to recommend that the Governor-in-Council issue regulations limiting or prohibiting reporting entities from entering into a financial transaction originating from or destined to designated foreign jurisdictions and entities.
MLRO- Money Laundering Reporting Officer (Canada)
The individual who manages an organization’s AML systems and acts as a focal point for related inquiries.
ML- Money Laundering
The process of taking money obtained by committing a crime and disguising the source to make it appear legitimate
Money Mule- A person who transfers money acquired illegally on behalf of others.
MSB- Money Service Business
A business that transmits or converts money, foreign exchange, remittance and/or that issues or redeems monetary instruments
N
Name Screening- The process of matching an internal record or batch of records against sanctioned list records, either manually or through an automated screening tool.
O
OFC- An offshore Financial Center
A country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy
Ongoing Monitoring- An AML control process that involves monitoring high-risk customers on a periodic basis based on their risk profile.
Operational Risk– The risk of direct or indirect loss of operations due to inadequate or failed internal processes, people or systems, or as a result of external events.
P
Partial Match- When an entity being screened is similar to a sanctioned entity and potentially shares identifying factors, such as date of birth. Partial matches require further human intervention to determine whether the match is a true match.
PEP- Politically Exposed Person
An individual who, through their prominent position or influence, is more susceptible to bribery or corruption and thus presents a higher risk as a customer
PEDP- Politically Exposed Domestic Person (Canada)
PEFP- Politically Exposed Foreign Person (Canada)
PIN- Purpose and Intended Nature [of a Business Relationship] (Canada)
A record that documents the purpose and intended nature of a business relationship, and includes information that would help an organization anticipate the types of transactions and activities the client may conduct.
R
Reasonable Measures (Canada)- Steps organizations must take to collect certain information but it is not mandatory, such as, asking the client, conducting open source searches, or consulting commercially available information.
Red Flag- A warning signal that should bring attention to a potentially suspicious situation, transaction or activity.
Reputational Risk- The potential that adverse publicity involving a financial institution’s business practices and associations, whether accurate or not, will cause a loss of confidence in the integrity of the institution.
Risk Appetite- The amount of risk that an organization is comfortable accepting in the pursuit of value or opportunity
Risk Assessment- A tool that allows an organization to identify and assess its potential risks and vulnerabilities. Try the KYC2020 Risk Assessment tool for FREE
RBA- Risk-Based Approach
The process of assessing of the various risks associated with different types of businesses, clients, accounts and transactions in order to maximize the effectiveness of an AML/CFT regime.
RCA- Relative or Close Associate
Sometimes referred to as “PEPs by association,” RCAs are individuals related to or who have a close connection to a PEP, such as spouses, friends and business partners.
RGS- Reasonable Grounds to Suspect (Canada)
A suspicion of corruption that is not biased or prejudiced, but is based on an assessment of facts, context, and AML/CTF indicators
Reporting Entity- Entities regulated by the PCMLTFA that must report certain transactions to the FINTRAC, such as accountants, life insurance companies, brokers and agents, MSBs, real estate brokers and securities dealers (Canada)
S
Safe Harbor- A legal provision to reduce or eliminate legal or regulatory liability for financial institutions, and their directors, officers and employees, if they report their suspicions in good faith to the Financial Investigation Unit (FIU).
Sanctions- Restrictive measures taken by individual countries, regimes, or coalitions with the goal of provoking a change in behavior or policy. Sanctions can restrict trade, financial transactions, diplomatic relations, and movement.
Sanctions List- A document or database listing individuals, legal entities, and countries with whom it is illegal to do business.
Sanctions Screening- Sanctions screening is a process employed within financial institutions to detect, prevent and manage sanctions risk. It is conducted via automated screening tools and manual processes.
SAR- Suspicious Activity Report
A report made by a financial institution about suspicious activity.
SCO- Sanctions Compliance Officer
The individual responsible for oversight of the sanctions compliance program. The SCO conducts ongoing monitoring for sanctions compliance, including sample testing and a review of exception reports, to enable the escalation of identified noncompliance or other issues to senior management.
SCP- Sanctions Compliance Program
A system designed to assist financial institutions in their sanctions compliance and to manage their sanctions risk.
SDD- Sanctions Due Diligence
A process that focuses on the risks specific to sanctions, while taking into account governance and risk assessment
SDN List- The Specially Designated Nationals and Blocked Persons List
A United States government sanctions/embargo measure targeting U.S.-designated terrorists, officials and beneficiaries of certain authoritarian regimes, and international criminals
SIE- Special Interest Entity
SIEs are high-risk organizations that are involved in criminal activities or are suspected of being involved in criminal activities
SIP- Special Interest Person
High risk individuals similar to PEPs, who have a history of involvement or alleged involvement in crime
Shell Bank- A foreign financial institution that does not have a physical presence in a foreign country.
Smurfing- A common money laundering method involving multiple individuals and/or multiple transactions for making cash deposits, buying monetary instruments or bank drafts in amounts under the reporting threshold
SRB or SRO- Self-Regulatory Body or Organisation (Canada)
A body that represents a profession (e.g. lawyers, notaries, other independent legal professionals or accountants), and which is made up of members from the profession and has the role of performing certain supervisory/monitoring functions of standards that are maintained by the professions.
Structuring- Illegal act of splitting cash deposits or withdrawals into smaller amounts, or purchasing monetary instruments, to stay under a currency reporting threshold.
Suspicious Activity– Unusual or questionable customer activity that may be related to a money laundering or other criminal offense, or to the financing of a terrorist activity
T
Target Match- Identification of an individual or entity as matching one named on a sanctions list, also referred to as a true match
Tax Haven- Countries that offer special tax incentives or tax avoidance to foreign investors and depositors
Terrorist Financing- The manner by which terrorists fund their operations in order to perform acts of terrorism
TMP- Transaction Monitoring and Filtering Program
A system required of financial institutions to monitor transactions after their execution for compliance with the Bank Secrecy Act and AML laws and regulations.
TBML- Trade-Based Money Laundering
A financial crime that involves hiding the proceeds of a crime by moving the funds to a specific destination via trade transactions
Third-Party Database- A database made up of data collected by an entity that does not have a direct relationship with the user. Examples of third-party databases include rating agencies, stock exchanges, and legal databases.
U
UBO- Ultimate Beneficial Owner
The person or entity that is the ultimate beneficiary when an institution initiates a transaction.
USA PATRIOT Act- The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. The historic legislation brought about significant changes to the field of AML, including more than 50 amendments to the Bank Secrecy Act.
UTR- Unusual Transaction Report (Canada)
An internal form that is used to record the details of any transactions (attempted or completed) that is suspected of being related to money laundering or terrorist financing.
V
VIR- Voluntary Information Report
A report that is filed, by non-reporting entities, when there is suspicion of money laundering or terrorist financing.
W
Whitelist- A list of individuals and entities that trigger an alert by an AST, but who are later cleared as not to being a match.
Willful Blindness- A legal principle defined as the deliberate avoidance of knowledge of the facts or purposeful indifference to a money laundering transaction.
AML Organizations, Associations and Regulatory Bodies
ACAMS- Association of Certified Anti-Money Laundering Specialists
The largest international membership organization dedicated to advancing the professional knowledge, skills and experience of those dedicated to the detection and prevention of money laundering around the world, and to promote the development and implementation of sound anti-money laundering policies and procedures
ACFCS- Association of Certified Financial Crime Specialists
A leading association and provider of practical tools and knowledge to help professionals improve results in financial crime detection and prevention.
BCBS- Basel Committee on Banking Supervision
The Basel Committee on Banking Supervision is the primary global standard setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters.
BIS- The Bureau of Industry and Security
An agency of the United States Department of Commerce that deals with issues involving national security and high technology
CAFC- Canadian Anti-Fraud Centre
The Canadian Anti-Fraud Centre collects information on fraud and identity theft. They provide information on past and current scams affecting Canadians.
EGFIU- Egmont Group of Financial Intelligence Units
An international organization that facilitates cooperation and intelligence sharing between national financial intelligence units to investigate and prevent money laundering and terrorist financing.
FATF- The Financial Action Task Force on Money Laundering
An intergovernmental organization founded on the initiative of the G7 to develop policies to combat money laundering.
FinCEN- The Financial Crimes Enforcement Network
A bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes
FIRA- Financial Industry Regulatory Authority
Dedicated to protecting investors and safeguarding market integrity in a manner that facilitates vibrant capital markets.
FIU- Financial Intelligence Unit
A central agency that is responsible for receiving, analyzing, and transmitting disclosures on suspicious transactions to the relevant authorities.
FINTRAC- Financial Transactions and Reports Analysis Centre of Canada
Canada’s financial intelligence unit and regulator for AML and CTF
IIROC- Investment Industry Regulatory Organization of Canada
A non-profit, national self-regulatory organization. Established through the merger of the Investment Dealers Association of Canada and Market Regulation Services Inc. on June 1, 2008, IIROC oversees all investment dealers and trading activity on debt and equity markets in Canada.
OFAC- Office of Foreign Asset Control
Part of the U.S. Department of the Treasury, OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals.
OSFI- Office of the Superintendent of Financial Institutions
The primary agency regulating financial institutions in Canada
Wolfsberg Group- An association of thirteen global financial institutions that have worked to develop global anti-money laundering guidelines for international private banks
This glossary of AML terms and acronyms as well as regulatory bodies and organizations, like the field of AML/CTF, will evolve over the coming months and years, so be sure to check back for updates.
Alternatively, if you are looking for an even more comprehensive glossary of AML acronyms, definitions and industry jargon, head over here.
