End-to-End Terminology of AML KYC
AML (Anti-Money Laundering):
Laws and regulations designed to prevent criminals from disguising illegally obtained funds as legitimate
income.
KYC (Know Your Customer):
Process used by institutions to verify the identity, suitability, and risks of a customer.
CDD (Customer Due Diligence):
Assessment of customers' profiles, risks, and activities.
EDD (Enhanced Due Diligence):
Additional scrutiny for high-risk customers to ensure full transparency.
PEP (Politically Exposed Person):
Individuals with prominent public functions, requiring extra monitoring.
Sanctions Screening:
Checking customers against lists of sanctioned entities or individuals.
Adverse Media Screening:
Reviewing negative news on clients to assess risk.
FIU (Financial Intelligence Unit):
National agency for analyzing and reporting suspicious transactions.
STR (Suspicious Transaction Report):
End-to-End Terminology of AML KYC
A report filed when suspicious or unusual transactions are identified.
CTR (Currency Transaction Report):
A report for large cash transactions, typically above a certain threshold.
UBO (Ultimate Beneficial Owner):
The individual(s) who ultimately own or control a company.
Onboarding:
The initial process of collecting and verifying customer information.
Ongoing Monitoring:
Continuous review of customer transactions and behavior to detect anomalies.
Risk-Based Approach:
Assessing customer risk and applying due diligence accordingly.
Red Flags:
Warning signs indicating potential suspicious activity.
AML Compliance Program:
Internal policies, procedures, and controls to ensure AML adherence.
Transaction Monitoring System:
Automated tools used to detect suspicious activities.
Regulatory Bodies:
End-to-End Terminology of AML KYC
Authorities like FATF, FinCEN, FCA that enforce AML compliance.
Periodic Review:
Scheduled reassessment of customer risk and documentation.
KYC Refresh:
Updating customer data at defined intervals or based on risk.
Customer Risk Rating:
A score assigned based on factors like geography, business type, etc.
KYC Utilities:
Shared platforms that allow financial institutions to access customer KYC data.
AML Risk Assessment:
Evaluation of potential risks related to money laundering for an institution.
Name Screening:
Checking customer names against watchlists and blacklists.
Blacklists:
Lists of individuals or entities with known or suspected criminal activities.
Whitelists:
Lists of approved or low-risk individuals/entities.
Grey Lists:
End-to-End Terminology of AML KYC
Entities or jurisdictions under increased monitoring by regulatory bodies.
KYB (Know Your Business):
Due diligence performed on corporate or business clients.
False Positive:
A system alert flagged incorrectly as suspicious.
Alert Investigation:
Manual review of flagged transactions or entities.
FinCEN (Financial Crimes Enforcement Network):
US-based regulatory body for financial crimes.
FATF (Financial Action Task Force):
Global watchdog for AML standards.
Wolfsberg Group:
Association of global banks promoting AML standards.
OFAC (Office of Foreign Assets Control):
US agency enforcing sanctions.
Sanctions Lists:
Databases maintained by authorities listing restricted entities.
High-Risk Jurisdictions:
End-to-End Terminology of AML KYC
Countries with weak AML controls or high corruption levels.
Correspondent Banking:
Relationship between two banks to provide services to clients.
Shell Companies:
Entities without active business operations used for illicit activities.
Layering:
Complex transactions to disguise the origin of illicit funds.
Placement:
Initial entry of illegal funds into the financial system.
Integration:
Final step where illegal money is made to appear legitimate.
Structuring (Smurfing):
Breaking large transactions into smaller ones to avoid detection.
Front Companies:
Businesses used to disguise illegal activities.
Audit Trail:
Documented history of financial transactions for transparency.
AML Training:
End-to-End Terminology of AML KYC
Regular training for staff to identify and prevent AML risks.
RegTech:
Technology used to enhance regulatory compliance.
KYC Remediation:
Process of updating outdated or incomplete customer data.
Jurisdiction Risk:
AML risk associated with the customer's country of origin.
Transactional Red Flags:
Indicators of unusual or suspicious transaction behavior.
Customer Profile:
A record that includes identity, transaction behavior, and risk level.
Money Laundering Typologies:
Patterns and methods used by criminals to launder money.
