The practise of restricting an individual's or legal entity's access to assets during or because of a sanction enquiry. Asset blocking is also known as asset freezing.
The practise of confiscating an individual's or legal entity's assets during or after an investigation into a sanctions violation.
The illegal transfer of assets from one jurisdiction to another in order to avoid fines, seizures, or other penalties.
A single entity, such as a government or a coalition of governments, acts to implement and enforce a sanctions regime, for instance the EU.
Batch Screening (Scanning)
The process of screening a company's entire client base and other linked entities, such as vendors, on a regular basis with ASTs.
The person who ultimately owns or controls an account through which a transaction is carried out, as well as those who have significant ownership of, or ultimate effective control over, a legal person or arrangement.
An internal list of names (including places, persons, entities, and individuals) that are screened to identify any sanctions exposure, in addition to government and vendor-maintained sanctions lists. Other potential additions to a firm's internal blacklist may come from OFAC advisories and other warnings that list entities that did not merit being placed on the SDN list but are still considered high risk. The FATF blacklist is a list of countries that FATF has determined are noncooperative in the international fight against money laundering and terrorism financing.
Cash Intensive Business
A business that primarily deals in cash transactions, such as restaurants, coffee shops and car washes.
An action or state of adhering to a set of legislation, regulations, rules, policy, specifications, or understood norms.
Sanctions that forbid the sanctioning country from carrying out any transactions or activities with a sanctioned country, except in rare and particular circumstances.
The illegal movement of significant amounts of cash across borders, frequently into nations with lax banking secrecy, lax exchange regulations, or lax anti-money laundering legislation.
Currency Transaction Report (CTR)
A report containing documentation of a physical currency transaction that surpasses a specified monetary threshold. A CTR can also be reported for several currency transactions that exceed the necessary reporting amount in a single day. Some countries, like the United States, have regulations governing when CTRs must be lodged with government authorities.
Customer Due Diligence (CDD)
The process of validating a customer's identification and analysing their risk of money laundering or terrorism financing. CDD is a critical AML compliance process that ensures financial institutions are not supporting illegal activities.
Criminal conduct involving the use of computers or the internet. Cybercrime can involve acts such as online fraud, identity theft, and the use of virtual currencies to enable illicit financial transactions in the context of AML.
The transfer of banking services from one bank to another. Large foreign banks typically provide correspondent banking services.
Denied Persons List (DPL)
A list, published by BIS, of individuals, entities, or companies that have been denied export privileges, most commonly because they have violated the Export Administration Act. American companies and individuals are forbidden from entering any export dealings with any person or entity on the DPL.
The enquiry and analysis of a firm or group as part of setting up for a business partnership. Before engaging into any financial transaction or business relationship, due diligence should be conducted.
A list of names that are not considered for screening. These are names that have been validated by the compliance team as not matching a name on a sanctions list.
A hit that is identified as a possible alert during the screening process but is dismissed, despite the fact that there is a match to a target named on a sanctions list; or screened activity that would have generated a hit if the screening process had been calibrated to catch such activity, such as a target match that is unidentified due to thresholds being too high.
A hit identified as a possible alert during the screening process but later found not to be a match to a target designated on a sanctions list.
Financial Action Task Force (FATF)
FATF is an intergovernmental agency that develops and supports policies to combat money laundering and terrorism financing. FATF establishes worldwide standards for anti-money laundering and counter-terrorism financing (AML/CTF) and analyses nations' progress towards compliance.
Financial Intelligence Unit (FIU)
A financial intelligence unit (FIU) is an agency of government that receives and examines complaints of suspicious activity before disseminating the information to law enforcement. FIUs play a key role in detecting and combating money laundering and terrorism financing.
The loss of property or assets as a result of legal action. In most cases, the owner of the property has broken the law, or the property has been tied to some form of illegal activity.
A company used to conceal the identity of the true owner or controller of funds. Front companies are frequently used to facilitate money laundering by concealing the source of cash or the final beneficiary of financial transactions.
A list of entities that are suspect or more likely to have a negative impact on a company. The grey list includes the names of nations with strategic shortcomings in anti-money laundering and counter-terrorism financing regimes in the context of sanctions. Furthermore, these governments have not made sufficient progress or otherwise committed to action plans to resolve FATF-identified inadequacies.
An informal value transfer system that operates outside of the formal financial sector. Because of their lack of transparency and oversight, hawala systems have been used to assist money laundering and terrorism financing.
A country or territory with lax anti-money laundering procedures and a high risk of illicit financial activities. Customers with ties to such nations may be subject to enhanced due diligence (EDD) by financial institutions.
The integration phase, often referred to as the third and last stage of money laundering process, places laundered funds back into the economy by re-entering the funds into the financial system and giving them the appearance of legitimacy.
Know Your Customer (KYC)
A process for authenticating a customer's identity and determining their risk of money laundering or terrorism financing. KYC is a crucial compliance strategy for financial organisations since it ensures that their accounts are not being used to facilitate illegal activities.
A term used in various international rules to refer to the person responsible for overseeing a firm's anti-money laundering activities and program and for filing reports of suspicious transactions with the national FIU. The MLRO is the key person in the implementation of anti-money laundering strategies and policies.
An individual who transfers illicit funds on behalf of another person or organisation. Money mules are often recruited through online job scams or other fraudulent schemes and may be unaware that they are participating in illegal activity.
Money Service Business (MSB)
A business that provides money transmission services, currency exchange, or check cashing. MSBs include a wide range of businesses that facilitate the transfer or exchange of money, including money transmitters, currency exchanges, check cashers, and prepaid card issuers. These businesses may operate through physical locations, such as currency exchange offices or check cashing stores, or through online platforms.
A business that transmits money or monetary value or sends.
Non-Bank Financial Institutions
A financial institution that is not a bank, such as a money transmitter.
Politically Exposed Person (PEP)
An individual who holds a prominent public position and may be at a higher risk for corruption.
A warning signal that should bring attention to a potentially suspicious situation, transaction or activity.
Relatives or Close Associates (RCA)
Individuals who are related to or have close personal or professional relationships with a "Politically Exposed Person" (PEP).
A tool that enables a company to detect and assess the extent to which it is vulnerable to risks. Risk assessments are the core of a solid sanctions compliance program in global banking. A risk assessment's primary goal is to drive improvements in financial crime risk management by identifying general and specific sanctions risks that a financial institution faces; the ways in which these risks are mitigated by a firm's sanctions compliance program controls; and any additional controls to mitigate the residual risk that remains for the institution. A well-planned and well-formulated risk assessment enables a company to understand its risk profile and then establish its risk appetite for conducting business in situations where sanctions are a possibility.
The assessment of the various risks associated with multiple kinds of companies, clients, accounts, and transactions in order to maximise the efficiency of an anti-money laundering program.
Sanctions are punitive or restrictive actions implemented by individual countries, regimes, or coalitions to induce a change in behaviour or policy. Sanctions have the potential to limit trade, financial transactions, diplomatic connections, and movement. In terms of implementation and enforcement, they can be particular or broad.
A company that has no significant assets or operations and is used as a vehicle for various financial transactions. Shell companies
may be used for legitimate purposes, such as to hold assets or facilitate mergers and acquisitions, but they can also be used to conceal the true ownership or control of assets, evade taxes, or launder money.
A commonly used money laundering method, smurfing involves the use of multiple individuals and/or multiple transactions for making cash deposits, buying monetary instruments or bank drafts in amounts under the reporting threshold.
Specially Designated Nationals and Blocked Persons List (SDN List)
OFAC-published list of individuals and organisations that are owned, controlled by, or acting on behalf of a designated country. The list also contains groups and individuals, such as terrorists and drug traffickers, who are associated with a particular crime rather than a country.
Special Interest Person (SIP)
A SIP is an individual who has been identified as being involved in activities that may pose a higher risk for money laundering or terrorism financing. This includes but is not limited to individuals involved in drug trafficking, arms dealing, human trafficking, smuggling, corruption, and fraud.
Violation of a currency reporting threshold by splitting cash deposits or withdrawals into smaller quantities or by purchasing monetary instruments. The practise may entail dividing a sum of money into smaller amounts and making two or more deposits or withdrawals that total the initial sum. Money launderers use structuring to circumvent financial institution reporting requirements. The method is prevalent in jurisdictions with mandatory currency reporting requirements.
Suspicious Activity Report (SAR)
A report filed with financial intelligence units or regulatory agencies when suspicious activity is detected.
The provision of funds or other financial support to terrorists or terrorist organisations.
Trade-Based Money Laundering
The use of trade transactions to disguise the proceeds of criminal activity.
A requirement for financial institutions to collect and transmit information about the sender and beneficiary of wire transfers.
A digital representation of value that can be digitally traded or transferred and can be accepted as a means of payment.
Virtual Asset Service Provider
A business that provides services related to virtual assets, such as exchanges and wallet providers.