ABC - anti-bribery and corruption - A catch-all term for policies and procedures to tackle bribes and corrupt practices. It usually includes gifts and hospitality, dealing with public officials, and when to make reports. It will outline an organisation’s stance against bribery and corruption.
ACAMS – Association of Certified Anti-Money Laundering Specialists - The largest global membership organisation dedicated to fighting financial crime. It provides training and certification, runs conferences and disseminates information on detection and prevention of money laundering
ADI – authorised depository institution - An Australian term for A financial institution licensed by the Australian Prudential Regulatory Authority (APRA) to carry on banking business, including accepting deposits from the public. Essentially an Australian bank.
AIM – alternative investment market - Commonly known as AIM, this is a sub-market of the LSE (London Stock Exchange). AIM caters to smaller, more risky companies. Those listed tend to be more speculative, partly because of AIMs more relaxed regulations and listing requirements as opposed to FTSE firms.
AFC – anti-financial crime - A catch-all term for policies and procedures for tackling financial crime. Financial crime could include tax evasion, fraud and bribery as well as money laundering.
AML – anti-money laundering - A catch-all term for policies and procedures for tackling money laundering. Often required of certain businesses known as regulated entities such as law firms and financial institutions, AML procedures require such things as client due diligence, ongoing monitoring, or source of funds checks.
AML/CFT – anti-money laundering/countering the financing of terrorism (also used for combating the financing of terrorism) - A more accurate acronym for anti-money laundering. A key element of AML is the prevention of funds being laundered by terrorists, as well as criminals. Countering the financing of terrorism involves the same policies and procedures as standard AML, but includes an awareness of the way money laundering benefits terrorist organisations and acts of mass violence.
AMLD – Anti Money Laundering Directive - A directive of the European Union on countering money laundering. Directives, unlike regulations which are directly applicable in member states, are not directly applicable and must be ‘transposed’ by each member state into national law. There are currently six directives on money laundering. EU member states must update their national laws when new directives are released.
AMLC – Anti-Money Laundering Council - The Filipino agency responsible for implementing the anti-money laundering law of The Philippines.
AMLSF – Anti-Money Laundering Supervisors Forum - A British AML organisation created by HM Treasury in 2007 to bring together all the bodies in the UK designated as supervisory authorities (such as the FCA and ICAEW) under the UK money laundering regulations. It aims to share and develop consistent best practice across AML.
BO – beneficial owner(ship) - A natural person (human being) who owns or controls a legal person (business or organisation), and on whose behalf a transaction is conducted. A person is generally a beneficial owner if they own or control a certain percentage of the organisation, usually 25%.
BOOM – beneficial owner, officer or manager - A term under the UK’s Money Laundering Regulations 2017 for a person in a firm or sole practitioner who has been approved by an authority. Someone who has a prior conviction is normally ineligible to be a BOOM. Acting as a BOOM without approval is a criminal offence.
CAMS – certified anti-money laundering specialist - A global benchmark for AML accreditation which is international recognised by leading agencies for aptitude and expertise in AML prevention and enforcement.
CDD – client due diligence - The process of performing background checks and screening of a customer or potential customer to ensure they are risk assessed, their identity is verified and pertinent information about them and their proposed transaction is collected and evaluated.
CFA – Criminal Finances Act 2017 - A UK law to counter tax evasion and the criminal facilitation of tax evasion by organisations. Requires reasonable procedures to be implemented by an organisation to prevent criminal facilitation, with a corporate criminal offence of failure to prevent if the procedures are not reasonable.
CFT – counter financing of terrorism (used interchangeably with CTF) - A sub-set of AML that focuses on the risk of terrorists and terrorist financing abusing the financial system. It generally operates in the same way as money laundering, but the end goal is to fund terrorist activities or to launder the proceeds of terrorist activities
COFA – compliance officer for finance and administration - A person in a UK law firm who is responsible for ensuring that systems and controls are in place to enable the firm, its managers and employees to comply with their obligations under the SRA Accounts Rules.
COLP – compliance officer for legal practice - A person in a UK law firm who is responsible for ensuring general regulatory and statutory compliance by the firm, its managers and employees. A COLP must be an authorised person, and is responsible for reporting failings to the SRA.
CTF – counter terrorist financing (used interchangeably with CFT) - A sub-set of AML that focuses on the risk of terrorists and terrorist financing abusing the financial system. It generally operates in the same way as money laundering, but the end goal is to fund terrorist activities or to launder the proceeds of terrorist activities
DAML – defence against money laundering - A UK legal process which can be requested from the National Crime Agency (NCA) where a person has a suspicion that property they intend to deal with is in some way criminal, and by dealing with it they risk committing an offence under the Proceeds of Crime Act 2002 (POCA).
DoJ – US Department of Justice - The United States federal executive department tasked with the enforcement of federal law and the administration of justice in the United States. It is headed by the United States Attorney General. It comprises of a range of agencies, including the FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Drug Enforcement Administration.
EDD – enhanced due diligence - A type of customer due diligence that involves investigating particular clients more thoroughly. More information about their history and more evidence will be required according to the risk they pose. EDD may be triggered by the client being from certain jurisdictions or other risk indicators which demonstrate the need to have a more detailed picture of the client, their UBOs, their source of wealth and other factors relating to the proposed transaction.
eKYC – electronic know your customer - A remote, paperless method of traditional know your customer methods. A customer’s identity and address are checked and verified through electronic means, such as checking passport details through a web portal or an app.
EIV – electronic identification and verification - A process of checking and verifying a person’s identity or other factors electronically. Often done by checking through a large amount of public records to ensure compliance.
FATCA – Foreign Account Tax Compliance Act - A US law passed in 2010 to target non-compliance by US taxpayers using foreign accounts. It requires foreign financial institutions and certain other entities to report on assets held by US account holders subject to withholding payments.
FATF – Financial Action Task Force - An international, inter-governmental policymaking body which establishes international standards to combat money laundering and counter the financing of terrorism. Formed in 1989, it has issued 40 recommendations for nations to adopt, and routinely assesses governments’ compliance with their recommendations. It may also grey-list certain countries which have deficiencies, which could result in those countries being a higher risk for money laundering.
FCA – Financial Conduct Authority - The UK regulator for around 50,000 financial services companies and financial markets in the UK. It supports a working financial system and regulates the market to promote competition. Also the supervisory authority for the financial sector’s AML compliance.
FCPA – Foreign Corrupt Practices Act - A US statute from 1977 which criminalised bribing foreign (non US) public officials. The main federal anti-bribery law, the accounting provisions within the Act require publicly listed companies to keep and maintain accurate books and have an adequate system of financial controls, often used to target corporate bribery.
FinCEN – Financial Crimes Enforcement Network - The US financial intelligence unit. A bureau of the US Department of the Treasury that collects and analyses information about financial transactions to combat money laundering.
GRC – governance, risk and compliance - An organisation’s strategy for governance and compliance controls and assessing and mitigating risk. A GRC strategy will inform risk management across the organisation, and will cover functions such as IT, HR, audit, legal and finance.
HMRC – His Majesty’s Revenue and Customs - The UK government department responsible for collecting taxes and paying some forms of state support, along with administering the minimum wage. It is the supervisory authority for money service businesses. Also a law enforcement agency tasked with investigating serious organised financial crime.
HMT – His Majesty’s Treasury - A UK government department which is the British finance and economics ministry, also known as the Exchequer and headed by the chancellor. Responsible for public finance and the UK government’s economic and financial services policy.
HNWI – high net-worth individual - An individual with a net worth of at least $1 million dollars in liquid assets, such as cash or investable assets. A very high net worth individual is someone with at least $5 million in liquid assets.
HRC – high-risk third country - A high-risk third country is one assessed as having strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation. These countries will have been assessed by the FATF, and are usually published in a list by the EU, UK and US. A transaction from a high-risk third country will generally require enhanced due diligence.
ID&V – identification and verification - This check identifies and verifies customers before they discuss an account or perform an automated transaction. It might take place through a phone application or web chat, and will ask the individual for a range of personal data such as account numbers and date of birth.
IR – independent review (an audit into the design and operational effectiveness of an AML programme) - An independent review is an audit that monitors the adequacy of a firms’ anti money laundering programme. It should be carried out by someone who understand the organisation, understands the money laundering risks, and is not involved in any part of the business to ensure it is independent.
JMLIT – Joint Money Laundering Intelligence Taskforce - A UK partnership between law enforcement and the financial sector to exchange and analyse information relating to money laundering and wider economic threats. It includes a range of financial institutions, the FCA, along with law enforcement agencies the NCA, HMRC, SFO, City of London Police and the Met.
JMLSG – Joint Money Laundering Steering Group - A UK committee including British bankers, insurers and other representative bodies designed to provide assistance in interpreting the UK Money Laundering Regulations. It publishes guidance notes on the Regulations and how to comply.
KYC – know your customer - Also known as Know Your Client, this is a mandatory process of identifying and verifying the client’s identity when they open an account, and also periodically over time. It involves checking to ensure the client is who they claim to be, and is required of both natural and legal persons.
LSAG – Legal Sector Affinity Group - A UK body of regulatory and representative bodies for legal services. It produces guidance on the UK Money Laundering Regulations for law firms. Their guidance has been approved by HM Treasury and constitutes official guidance.
ML – money laundering - The process of turning ill gotten gains into legitimate cash and property. Money laundering has three stages: placement - where dirty money is injected into the financial system; layering - where it is moved around the system in a series of transactions or bookkeeping tricks to clean the money; and integration - where the money is removed as profit from the financial system.
MLCO – money laundering compliance officer - A role in an organisation who ensures internal compliance programmes and controls are adequate to counter money laundering risks. The MLCO must have a position on the board.
MLRO – money laundering reporting officer - This is the person who is nominated to consider suspicious activity reports. They are responsible for taking external SARs to the National Crime Agency. This person may also be the money laundering nominated officer (MLNO).
NCA – National Crime Agency (UK) - The UK law enforcement agency responsible for leading the UK’s fight against serious and organised crime. They also receive and review suspicious activity reports (SARs).
OFAC – Office of Foreign Assets Control - A US agency under the Department of the Treasury which administers and enforces economic and trade sanctions against US sanctions targets and Specially Designated Individuals (SDIs).
OFSI – Office of Financial Sanctions Implementation - A UK agency part of HM Treasury which implements and enforces economic sanctions against UK sanctions targets, levies fines for non-compliance, and produces guidance to ensure sanctions are properly understood.
OPBAS – Office for Professional Body Anti-Money Laundering Supervision - The UK body that supervises the 25 professional body supervisors in the legal and accountancy sectors. It aims to improve the consistency of professional body AML supervision, although it does not directly supervise legal or accountancy firms.
PCP – policies, control, procedure - These are the things regulated firm must establish and maintain to mitigate and manage effectively the risks of money laundering and terrorist financing identified by in their risk assessment. PCPs must cover a number of requirements as specified by the Money Laundering Regulations 2017.
PEP – politically exposed person - This is someone who has been entrusted with a prominent public function, such as being elected or appointed to a national or regional office or a military position. Family and close associates of PEPs are also covered. PEPs generally require enhanced due diligence as they can pose a greater risk of money laundering.
POCA – Proceeds of Crime Act 2002 - One of the UK’s main money laundering regulations. It covers the confiscation of proceeds made from criminal activities and money laundering, and addresses the confiscation and recovery of illegally-gained funds, property and assets.
PSC – person with significant control - Someone who owns or controls a company, also known as a beneficial owner. A company may have one or several persons with significant control.
PWRA – practice-wide risk assessment - A document that all law firms must complete. The MLRO assesses what level of money laundering risk the firm faces, and how the firm will mitigate those risks. There are five mandatory risk factors to cover: client risk, transactional risk, geographical risk, product or service risk and delivery channel risk.
RA – risk assessment - A formal, systematic process to identify and quantify events based on their likelihood and frequency, and the probability and magnitude of the consequences. Controls such as policies and training will mitigate the risks which have been identified.
RBA – risk-based approach - A way of approaching money laundering compliance. The principle being that where there are higher risks, such as the geographical location of the client or the nature of the transaction, there should be enhanced measures to manage and mitigate those risks. Correspondingly, when the risks are lower, simplified measures may be permitted.
RCA – relative or close associate - These are individuals or businesses who are related to or are closely associated with a politically exposed person. They may also require enhanced due diligence.
SAR – suspicious activity report - A document from a regulated entity filed with a national money laundering authority, which details the possible suspicions of a transaction or a client. They should be filed by the nominated officer or MLRO. Usually work on a transaction will have to stop after a SAR has been filed, and it may be a criminal offence known as ‘tipping off’ to tell someone a SAR has been filed
SDD – simplified due diligence - The lowest permissible form of due diligence, and should only be carried out where there is little risk of money laundering. SDD is not automatic, but dependent on the level of risk which has been identified by a risk assessment.
SFO – Serious Fraud Office - A UK government department that investigates and prosecutes serious or complex fraud, bribery and corruption cases in England, Wales and Northern Ireland.
SIPs – special interest persons - Someone who is alleged to have been involved in a criminal activity such as corruption, financial crime or trafficking. They post an AML risk due to a current or historical involvement in financial crimes.
SoF – source of funds - The origin of the particular funds or monetary instrument subject of the transaction, or the origin and means of transfer of monies that are accepted for the account.
SoW – source of wealth - The source of the customer’s entire body of wealth, such as from employment, inheritance, investments or ownership of a business.
STR – suspicious transaction report - A report on suspicions which cover actions directly related to the transaction, such as deposits, funds, or transfers to the account. Broadly similar to a Suspicious Activity Report, but slightly narrower in focus given it is about the transaction itself. The UK tends to use SAR while the EU and US tend to favour STR.
TACT – Terrorism Act - The 2000 UK Terrorist Act which contains a number of money laundering and counter terrorist financing laws and regulations.
TBML – trade-based money laundering - A form of money laundering which takes advantage of complex systems of international trade. General involves giving false information in imports or exports, for instance over or under billing for shipments in order to hide money
TF – terrorist financing - A sub-set of AML that focuses on the risk of terrorists and terrorist financing abusing the financial system. It generally operates in the same way as money laundering, but the end goal is to fund terrorist activities or to launder the proceeds of terrorist activities
UBO – ultimate beneficial owner(ship) - A natural person (human being) who owns or controls a legal person (business or organisation), and on whose behalf a transaction is conducted. A person is generally a beneficial owner if they own or control a certain percentage of the organisation, usually 25%.
UKFIU – United Kingdom Financial Intelligence Unit - The UK body responsible for receiving and analysing Suspicious Activity Reports, and sharing the information with law enforcement agencies.
