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.
Fixed assets are goods that an individual or legal entity possesses that have a monetary worth; current assets include raw materials, currency, and any money owed to the individual or legal entity by third parties.
The illegal transfer of assets from one jurisdiction to another to escape fines, seizure, or other penalties.
The illegal practice of purchasing assets, such as real estate properties, involves a mix of legal and illegal funds, making matches more difficult.
ShapeFinancial planners use the term “asset protection” to describe the protection of assets from taxation in other jurisdictions. Individuals and businesses use asset protection techniques to limit creditors’ access to valuable assets while remaining within the debtor-creditor framework.
Financial institutions and regulated license companies use software systems to facilitate the screening process instead of manual screening. In general, ASTs are designed to screen against sanctions lists. ASTs generate hits against sanctions lists that may be consolidated into alerts based on, for example, a customer record. For one customer record, multiple hits against sanctions lists may be consolidated under one alert.
A form of financing in which Bank A issues a letter of credit as collateral to Bank B to issue a separate letter of credit to the beneficiary.
This process occurs when the underlying agreement between the applicant and beneficiary includes restrictions on the credit quality of the Bank issuing the letter of credit, the location of the issuing Bank, or other terms that prevent the applicant’s Bank from issuing a direct letter of credit to the beneficiary. A sanction evader can use back-to-back letters of credit to conceal the name of a sanctioned bank from the documentation.
A background check is a procedure that combines data sources and public information to investigate a person or entity. They can be used to verify if a person is who they claim to be or to ascertain if a company exists and is competent within a subject matter area it claims to be.
A bank draft is a payment similar to a check, except the issuing bank guarantees the amount. The monies are pulled from the requesting payer’s account and held in the bank’s reserve account until the payee cashed the draft. Bank drafts give the payee a more secure payment method than personal checks.
A bank guarantee is a guarantee issued by a bank on behalf of an applicant to cover a payment obligation to a third party. In other words, the bank becomes a guarantor and is liable for the individual requesting the guarantee if they cannot make the payment they agreed upon with a third party.
These refer to laws and regulations in several nations that prevent banks from sharing account information or simply revealing its existence without the account holder’s permission. This process prevents the movement of information across national borders between financial organisations and their regulators. One of FATF’s 40 Recommendations states that countries should ensure that secrecy laws do not inhibit the implementation of the FATF Recommendations.
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