For financial crime professionals, AML officers, or anyone seeking clarity on fraud and AML terms, Edifice offers a glossary of common acronyms and definitions.
We’ll continuously update this resource to reflect industry developments.
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 economic 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.
It is a term that is used increasingly in the world of compliance. It describes an integrated approach to managing 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.
Organisations employ measures and strategies to detect, mitigate, and stop fraudulent activities, increasingly intertwined with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) efforts.
A fraudster engages in deceptive practices to achieve financial or other personal gain. They could impersonate someone, spend counterfeit money, or trick others into revealing private information. Fraudsters can target several different industries and use many different tactics.
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.
Professionals such as lawyers, notaries, accountants, investment advisors, and trust and company service providers who assist in transactions involving the movement of money are deemed to have a particular role in identifying, preventing and reporting money laundering. Some countries impose due diligence requirements on gatekeepers, such as those of financial institutions.
Governance is the allocation of power and decision-making authority among the board of directors and management to establish internal controls to manage risk and comply with laws, regulations, and internal policies. Governance may include systems of checks and balances and a responsibility for leadership and organisation.
The party who transfers title or ownership of property or assets. In a trust, typically, the person who creates or funds the trust.
A grey list is a list of entities considered suspicious or at 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 FATF.
An informal value transfer mechanism exists in the Middle East, North Africa, and the Indian subcontinent. The system works outside of established banking systems. In its most basic form, a customer approaches a hawaladar and provides him money to transfer to another individual. The hawaladar contacts his counterpart in the second person’s home, who then transfers the cash to that individual. The hawaladars keep a running tally of who owes whom a net sum.
